Dealflow | October 13, 2021

Center Creek impact fund raises $30 million to invest in affordable single-family homes

Roodgally Senatus
ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, October 13 — Single-family properties represent more than half of all rental housing in the country. Nearly two-thirds of Black and Hispanic renters are facing housing insecurity, compared to just 17% of white renters.

Washington-based Center Creek Housing Fund III will acquire around 3,000 distressed single-family properties to renovate into energy-efficient homes in North Carolina, South Carolina, Orlando and Florida.

The fund received equity commitments from Capricorn Investment Group’s Sustainable Investors Fund, Truist Bank, Regions Foundation and family offices. It is looking to raise $150 million to buy up to $600 million in single-family homes.

Big Path Capital is Center Creek’s placement agent.

Market-rate returns

Fund III has a targeted net IRR of 15%. Center Creek’s first single-family homes fund provided a 14.2% net IRR return to investors, showing “Investors don’t have to choose between achieving financial returns and driving social impact — they can do both,” said Center Creek’s Dan Magder.

Racial equity

At least 90% of Center Creek’s residents are Black and Latinx renters, Magder told ImpactAlpha. Before the pandemic the firm launched Pathway 2 Homeownership to help residents become homeowners. “Our first cohort is expected to start being mortgage-ready and complete their pathways to homeownership by early next year,” he said.