American South Fund Management, a joint venture between SDS Capital Group and Vintage Realty, has closed its American South Real Estate Fund II with $174 million in commitments. The fund will back investments in affordable housing across the South.
The fund was nearly three times the size of the firm’s debut impact fund, ASREF I, and includes a $50 million investment from funds managed by GCM Grosvenor. That investment represents the first public pension capital to be committed to ASFM’s funds. GCM, which has been managing emerging manager capital in real estate since 2010, invested in ASREF II from funds managed on behalf of five public pension plan investors. GCM currently manages more than $5 billion of real estate emerging manager programs.
Deborah La Franchi, AFSM managing partner and founder and CEO of SDS Capital Group, said in a prepared statement that ASREF could not tap into public pension fund capital without the GCM Grosvenor platform, which suballocates and bundles pension fund capital into amounts scaled for the smaller-sized funds of emerging managers such as ASFM.
Peter Braffman, managing director at GCM Grosvenor, said in prepared remarks the ASREF II investment closely aligns with their focus on identifying firms representing compelling strategic partnerships.
The remaining equity investments are predominantly from financial institutions.
Properties funded
ASFM, through the ASREF I and II funds, provides preferred equity and equity financing for real estate sponsors with projects in 10 Southern states: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas. The ASREF I and II funds have, to date, committed $106 million to 22 projects, financing 5,147 housing units, 81 percent of them affordable to families at less than 80 percent of the area median income.
David Alexander, ASFM managing partner and CEO of Vintage Realty Co., said in a prepared statement the success of ASREF II is a testament to the fund manager’s investment strategy. He said they are financing affordable housing units in communities that have a deep desire for the housing but are faced with a stagnant supply.
In July, funds affiliated with ASFM and Elizabeth Property Group acquired a portfolio of six Texas LIHTC properties totaling 1,444 units from an undisclosed seller. The portfolio consisted of the 336-unit Willow Green in Houston, the 232-unit Woodglen Park I & II in Duncanville, the 232-Pine Club in Beaumont, the 232-unit Ridgewood West in Huntsville, the 232-unit Saddlewood Club in Bryan and the 180-unit Tealwood Place in Wichita. The acquisition and renovations are being funded through ASREF II and the partners plan to keep the units affordable at 60 percent AMI through 2042 and 2043.
ASREF I funded the new construction of Preserve at Ridgeville, a 240-unit community in Ridgeville, S.C., a suburb of North Charleston, S.C., developed by Portage Real Estate. About 50 percent of the units will be affordable at 80 percent or less of the AMI.
