Asset AllocationMay 22, 2024

NYC Pensions Invests $60M for 25% Stake in Affordable Housing Joint Venture

Community Stabilization Partners was created after the 2023 collapse of Signature Bank to help support rent-stabilized apartments.

Reported by Michael Katz

New York City’s pension funds have made a $60 million investment in Community Stabilization Partners, a joint venture backed by nonprofit finance company the Community Preservation Corporation, affordable housing nonprofit Neighborhood Restore, and Related Fund Management, the investment management arm of real estate firm Related Companies.

The investment gives the New York City Employees’ Retirement System a 25% stake in CSP, which was created after the collapse of Signature Bank in March 2023. At that time, the Federal Deposit Insurance Company temporarily took over the bank’s commercial real estate loan portfolio, which it divided into pools. The companies backing CSP applied in late 2023 to partner with the FDIC to service the rent-stabilized portion of Signature Bank’s multifamily commercial real estate portfolio.

CSP purchased a 5% equity stake in Signature Bank’s rent-stabilized loan portfolio, with the FDIC holding the remaining 95% as receiver. The portfolio includes approximately 1,140 buildings and 35,000 units, more than 80% of which are rent-regulated, representing approximately 3% of New York City’s entire rent-regulated housing stock.

According to CSP, Signature Bank was the second-largest lender to the New York City rent-regulated multifamily market, and the bank’s collapse put owners and tenants “in a precarious position.” CSP says it is focused on preserving the affordability and physical quality and financial stability of the properties.

“The 35,000 rental units in the Signature portfolio could have faced grave risks as a result of the bank’s collapse – preserving them is an enormous team effort, and we are proud to be part of it,” New York City Comptroller Brad Lander said in a statement.

The investment was made under NYCERS’ Economically Targeted Investment program, which is managed by the comptroller’s Bureau of Asset Management.