Belveron Partners, a real estate investment management firm that specializes in affordable housing, announced Tuesday that it closed its seventh fund, Flagship Fund VII, with $354 million in total capital commitments, Commercial Observer has learned.
This exceeds the $284 million that Belveron Raised in its previous fund that closed in late 2020.
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Belveron Partners chief investment officer Josh Plattner told CO that the capital sourcing for Fund VII differed from the firm’s previous fundraising strategies, in that it moved beyond a few traditional institutional investors who had previously powered its relationship network. This time, Belveron expanded its base.
For Fund VII, the firm secured agreements with new investor partners that included a sovereign wealth fund, a pension fund, a university endowment, family offices, and outsourced CIOs.
“Historically, we’d been conformable being ‘behind the scenes’ — we were more of an allocator than a direct investor of capital,” said Plattner. “I don’t think we really tried to market our brand before, and we realized that now is the time to do so, especially by broadening our base of investors.”
“Obviously, in this market, this isn’t the easiest time for capital raising, so we used a placement agent for the first time, and really hit the street and told our story,” he added.
Fund VII closed just over $200 million in capital commitments by February 2023 and ended with $354 million in commitments just after Halloween this year. Not too scary at all.
All told, Belveron Partners has raised $1.2 billion across seven different funds in 18 years.
“This continued confidence reflects Belveron’s ability to expand its capital base and build on our track record of thoughtful, yield-focused affordable investments in this nuanced segment of the real estate market,” said Paul Odland, founder & managing partner at Belveron Partners
Founded in 2006, Belveron Partners has carved a niche for itself by fundraising private capital and investing it into affordable housing, either building it new or preserving existing affordable housing complexes. Plattner told CO that Belveron Partners differs from other private players in the space in that they are primarily “yield-focused.”
“We have a ‘do-no-harm’ policy and want to expand the affordable housing stock, but there aren’t many private equity funds in the space. The ones that are already there, are more focused on the mission than they are on returns,” he explained.
He added that the highly regulated nature of affordable housing makes it a lot less risky to invest in. It’s not always easy, however. Plattner said that founder Odland compares navigating the city, state and federal regulatory environment of affordable housing to going to the DMV and added that it’s critical to understand how regulations work to decrease so much traditional risk found in other asset classes.
“Understanding how to utilize the subsidy to benefit the residents and generate our returns really helps to mitigate risk,” he said. “We get to lock in our business at closing with certainty around rents and can reduce our expenses by partnering with state agencies and local governments.”
He added that investing in Section 8 housing vouchers provides his firm with federal government contracts and that agencies like Fannie Mae, Freddie Mac, and the Federal Housing Administration are dependable partners who “have a duty to serve our space.”
Fund VII has already invested $120 million of equity into nine affordable housing projects in California and Texas. The vintage 2020 Fund VI ended up deploying its $280 million of equity into 22 investments.
Some of these projects include Washington Square Apartments in Sacramento, Calif., a 40-unit development; Presidio Park in Santa Barbara, Calif., a 50 unit project; Pacific Terrace Apartments in Midway City, Calif., a 98 unit deal; and Waters Park Apartments in Austin, Texas, 442 unit complex.
Brian Pascus can be reached at bpascus@commercialobserver.com