NYC Pension Fund Allocates $60 Million to Safeguard Affordable Housing

New York City’s civil employees’ pension fund, valued at $86 billion, is channeling up to $60 million into a collaborative effort spearheaded by the Community Preservation Corp to protect affordable housing. 

The initiative is designed to secure nearly 35,000 rent-stabilized apartments that were jeopardized by the unexpected downfall of Signature Bank.

NYC Comptroller Brad Lander announced on Tuesday that the New York City Employees’ Retirement System (NYCERS) would hold a 25% ownership in this venture, which also involves Related Fund Management and Neighborhood Restore HDFC.

Comptroller Lander stressed the strategic focus of his office on safeguarding the city’s affordable housing. “Expanding and protecting our affordable housing supply through sound investment decisions is a major priority of my office,” Lander stated, projecting an internal rate of return of nearly 11%, net of fees. 

The majority of the apartments included in this deal are located in Manhattan and the Bronx, with additional units spread across Brooklyn and Queens.

The failure of Signature Bank last year prompted concerns among tenants and city officials regarding the future of the bank’s portfolio of rent-stabilized buildings.

At a news conference, Mayor Eric Adams underscored the importance of maintaining affordable housing for New Yorkers. 

Adams declared, “We have to make sure those who are union workers and working-class people have an opportunity to stay in the city they helped build.” 

He added, “This is an area we can all agree on. New Yorkers must be housed and they must be housed in an affordable way.”

Queens Borough President Donovan Richards, Jr. expressed the urgency of collaborative efforts to preserve, protect, and expand affordable housing, noting that the city is currently facing a housing crisis.

Richards stated, “I’m grateful to all our fellow trustees for uniting and making this investment to preserve thousands of rent-stabilized housing units to help keep a roof over our people’s heads. Our families deserve to live with dignity.”

The collapse of Signature Bank led New York bank regulators to place it into receivership, triggering the Federal Deposit Insurance Corp. (FDIC) to facilitate the sale of the bank’s commercial property loans. 

In a recent development, the FDIC sold a 5% equity interest in two ventures that manage these loans to the CPC-led partnership, which includes a portfolio of around 35,000 units, predominantly rent-regulated.

NYCERS’s investment is part of a broader program managed by Lander’s office, which seeks to produce market-rate returns from investments in affordable housing and economic development. 

Despite aiming to allocate 2% of its assets to such initiatives, the city’s pension funds currently invest less than 1% of their combined $272 billion in assets in affordable and workforce housing. 

This step reflects an effort to mitigate what has become the city’s most severe housing shortage in over half a century, highlighted by a vacancy rate for rentals at a mere 1.4%, the lowest since 1968.