New York City pensions to fund $250 million apartment venture
Manhattan's rents have plunged during the pandemic, which made renting affordable but the price declines also have damped developers' enthusiasm for new projects. Credit: View Pictures/Universal Images G/View Pictures
For New York City's pension funds, there's no time like now to invest in new apartments.
The two largest retirement systems — covering public school teachers and municipal employees — are teaming up with developer Hudson Cos., to allocate $250 million for construction of middle-income housing in the city and surrounding suburbs, the developer said.
The pensions will commit $243.75 million of that equity, which will be leveraged to build as many as 10 projects or 2,000 units, said Joe Riggs, principal at Hudson. The partnership has so far identified two possible sites, one in Brooklyn and the other in Westchester County.
A Hudson spokesman told Newsday on Wednesday it "will examine potential development sites near Long Island Rail Road stations." He couldn't provide a breakdown of how much money will be invested in Island projects.
New York City's rents have plunged during the pandemic, which made renting affordable but the price declines also have damped developers' enthusiasm for new projects. That's created an opening for those who seek to build affordable units, Riggs said.
The joint venture must use at least 70% of the funds to build new housing, according to terms of the deal. The remainder may be used to acquire and renovate existing units. Projects may range from all rentals to lower-priced co-ops and condos, Riggs said.
New York City projects would likely have about 30% of units designated as affordable to middle-income tenants, with the rest available at market rate — a balance that's been used traditionally to make them profitable, Riggs said.
The partnership "creates an innovative new fund to generate sound financial returns for our pension systems while developing critical new housing throughout the region," Yvonne Nelson, head of real estate at the New York City comptroller's office, said in a statement.
This is the second joint venture between Hudson and the city retirement system. In 2013, all five New York City pension funds invested a combined $500 million in areas damaged by Superstorm Sandy.
With James T. Madore
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