Fund to End Homelessness Raises $135M to Buy Apartments

Homelessness has been a mounting issue in the U.S. – but nonprofit Community Solutions with help from social impact investment firm, BDP Impact Real Estate, is trying to combat the issue.

A 2023 annual report from Housing and Urban Development revealed that 653,104 Americans experienced homelessness during that year. That figure is a new all-time high and a 12 percent surge from 2022.

To help combat insecurity, the CS Large Cities Housing Fund has been created. Since 2022, the fund has purchased 1,155 apartment properties. It’s provided shelter to more than 340 individuals exiting homelessness.

Recently, Community Solutions said it secured $135 million to close out the fund.

“What we’re doing is using lower-cost equity, so equity from investors who are interested in both getting a financial return, but also interested in the impact that they can have on homelessness,” Dave Foster, president of BDP and manager of the Large Cities Housing Fund, told GlobeSt.

“And we are buying existing apartment buildings in targeted markets, those targeted markets, I think this is what sort of brings it back to the point you’re raising are places where Community Solutions is on the ground working with what’s called the continuum of care.”

The properties that are purchased within the fund get leased through partnerships in the community of the homelessness response system, according to Community Solutions. Half of the units available in the fund are reserved for workforce affordable housing, while the other 50 percent is for those leaving homelessness.

While the evidence is anecdotal, Foster noted that older Americans have recently been more prone to housing insecurity.

“We’re seeing an increase of seniors in the homeless population,” he said.

A report from the National Alliance to End Homelessness found that nearly 20 percent of Americans over the age of 55 were without shelter in 2023.

Currently, the fund owns properties in six cities including Denver, Jacksonville, Baltimore, Charlotte, Nashville, and Phoenix. Particularly, Jacksonville is seeing a major impact from the investment. The units the fund purchased within the city accounted for 27 percent of housing placements for veterans escaping homelessness in 2023. And in the first quarter, housing placements hit a four-year high.

But beyond that, Foster said that the fund expects to acquire properties in Sacramento and San Diego. Plus, it is exploring more opportunities in California.

“We’re looking very hard at a number of properties in the Los Angeles area,” he said.

“We don’t have any under contract yet but I would guess that’s where we’ll go next, as well as Fresno as we get on towards spending down our fund.”

Overall, the biggest driver of homelessness is the limited supply of properties, according to Foster. But funds can solve the problem by “cost-effectively” acquiring property and then connecting it to a housing system, he added.

“Now, implicit that you’ve got responsible nonprofit ownership and you’re not trying to raise rents as quickly as possible, you need a certain kind of capital and a certain type of nonprofit owner to do this,” Foster said.

“But if you can have those two ingredients, there are thousands of housing vouchers, for example, that go into place every year, we’ve got in our particular case to focus deeply on hundreds of veterans in each of these communities where we’re working, who have access to these housing vouchers, and yet are remaining homeless. It’s not the whole of the solution but it’s a major necessary ingredient.”