(MENAFN- 3BL) LANSING, Mich., February 21, 2024 /3BL/ - Cinnaire has announced the closing of the $55 million Ubuntu Fund, an equitable access fund developed to support affordable housing development with underinvested developers in the Midwest region. The creation of this fund was made possible through the investments of leading financial institutions – PNC Bank, KeyBank, Fifth Third bank and JP Morgan Chase.
With the need for affordable housing throughout the nation at an all-time high, the Ubuntu Fund is an opportunity for leaders in the tax credit industry to address the prevailing disparities in the affordable housing sector for emerging developers.
The $55 million fund was designed to provide access to equity for developers that have faced systemic barriers to securing traditional funding sources. The investors in Ubuntu were united by the shared goal of expanding access to capital to emerging developers of color working in the Low-Income Housing Tax Credit (LIHTC) industry.
Across the United States, affordable housing is often located in communities of color, according to the National Low Income Housing Coalition, yet the opportunity for local underrepresented developers to spearhead these projects has been limited. Studies show that just 2 percent of development companies are led by individuals from underrepresented backgrounds. Funding through Ubuntu will provide support and structure that enables these minority-led companies to thrive.
The fund's objective aligns with the principles of its namesake Ubuntu, a philosophy emphasizing that individuals are shaped by relationships with others. Ubuntu originates from the Nguni language and translates as“humanity towards others.” The word's fundamental elements include respect, communalism, conciliation and inclusiveness-values at the core of Cinnaire's mission and the purpose of the fund.
“We are pleased to invest in the Ubuntu Fund,” said Celia Smoot, head of fund investments at KeyBank Community Development Lending and Investment.“KeyBank is invested in the expansion of its community impact, and our investment helps to remove the barriers of entry for minority led affordable housing developers.”
The Ubuntu fund specifically addresses two critical challenges faced by emerging underrepresented developers-lack of access to an important capital resource and the opportunity to take the lead in real estate initiatives. By doing so, Ubuntu seeks to break down barriers and facilitate accelerated development capacity, leading to long term success for underrepresented developers.
“Ubuntu stands as the inaugural fund developed as part of Cinnaire's commitment to drive capital and technical assistance to advance racial and socio-economic equity,” said Mark McDaniel, president and CEO of Cinnaire.“This fund will remove roadblocks and set a path forward for these developers to help change the trajectory of the current affordable housing crisis.”
The projects in the Ubuntu fund are being developed by real estate companies that have demonstrated a commitment to improving communities through innovation and value creation. Ubuntu will support six transformative projects across Michigan, Wisconsin and Illinois. Several of the projects are located in rapidly changing areas, blocks from catalytic development that could lead to economic displacement. The need to preserve affordable housing is amplified as these areas gentrify.
“Fifth Third Community Development Company and Fifth Third Bank are proud that our investment in the Ubuntu Fund will contribute to deepening the bench of LIHTC developers of color. We have seen that supporting diverse developers leads to greater community engagement and positive impact for residents.” Amber David, investment director, Fifth Third Community Development Company.
The inclusion of these deals in the Ubuntu Fund provides them with access to capital that would otherwise be lacking. This fund gives the new development company the opportunity to hit the ground and break into the market, with the goal of becoming a substantial player in the Midwest LIHTC market.
About Cinnaire
Cinnaire is a nonprofit financial partner that supports affordable housing developments along with community and economic revitalization initiatives through creative investments, loans and real estate development services. Since 1993, Cinnaire has invested $5.7 billion to support the development of 811 housing communities in 10 states, providing 63,000 affordable apartment homes for more than 137,000 individuals and families and has provided community development loans to support the creation/retention of more than 187,000 square feet of commercial, mixed-use, and community space. In its mission to change lives and transform neighborhoods into thriving communities, Cinnaire has helped to create or retain over 92,000 jobs and spur $10.1 billion in economic impact.
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