BRIDGE Targets $1B in Affordable Housing Investments
BRIDGE Housing is turning to private equity to expand its reach in one of the nation’s most strained housing markets. The San Francisco-based nonprofit, long known for developing affordable housing across the West Coast, has launched a $350 million equity fund that marks its first foray into private equity.
The new vehicle, BRIDGE Housing Impact Fund I, is designed to unlock roughly $1 billion in total investment capacity to acquire, preserve, and create affordable and workforce housing across high-cost metropolitan areas in California, Oregon, and Washington. KeyBank and BMO have each committed $25 million as anchor investors, while PGIM Real Estate has also made an early investment. Additional stakeholders are expected in the months ahead.
The nonprofit frames the move as a way to shift from labor-intensive, subsidy-dependent financing toward a market-driven model that allows it to act more quickly on acquisitions. Such speed is increasingly crucial on the West Coast, where more than 50,000 affordable housing units are expected to lose long-term income restrictions within the next five years.
BRIDGE intends to deploy capital to acquire properties in danger of converting to market-rate and to buy unrestricted assets that can be repositioned as income-restricted housing serving residents between 60% and 120% of area median income.
The Impact Fund builds on four decades of experimentation by BRIDGE to bring mainstream capital markets into affordable housing. The organization was the first nonprofit developer to secure a credit rating and to issue both taxable and tax-exempt bonds. In recent years, it has worked with partners including Morgan Stanley and CalPERS to open new forms of financing for housing providers.
Just last year, KeyBank underwrote $71.5 million in tax-exempt construction bonds for one of BRIDGE’s Portland projects. In 2022, the nonprofit secured a $250 million credit facility backed by Morgan Stanley and National Equity Fund, helping finance multiple acquisitions. BRIDGE also tested the market in 2020 with a $100 million general-obligation bond, an offering that created a new asset class for nonprofit housing operators.
BRIDGE Housing has expanded aggressively in the past few years, reporting portfolio growth of 11.5% in 2024. It currently owns or manages more than 14,500 units with assets exceeding $4 billion and nearly 32,000 residents living in its communities. Acquisitions are taking on an outsized role in that expansion. Between 2024 and 2027, roughly half of the 5,100 affordable units in its pipeline are expected to come from acquisitions.
Over the past year alone, the nonprofit acquired four properties that preserved more than 600 homes at risk of conversion to market-rate rents while adding 257 affordable units through the repositioning of market-rate apartments. The new Impact Fund is expected to accelerate this work, with projections of about 20 acquisitions totaling 3,500 units over the next three years.
While affordable housing deals have traditionally relied on layered subsidies and tax credit structures, BRIDGE’s new fund sets out to streamline the process by using equity from institutions that are increasingly pursuing impact investment strategies. By avoiding competition for limited public subsidies, BRIDGE argues it can reduce transaction costs and deliver faster investor returns while preserving long-term affordability.
The strategy mixes three approaches: buying properties with expiring affordability covenants, acquiring market-rate housing to convert into affordable and workforce housing, and acquiring naturally occurring affordable housing. In certain cases, the fund may also support new construction. Repositioning properties to include income restrictions makes them eligible for tax abatements and below-market financing, enhancing investor yields.
Source: GlobeSt/ALM