JBG SMITH’s Affordable Housing Initiative Raises $78M

The Washington Housing Initiative has raised $78 million from investors to acquire and operate several thousand units of workforce housing. The affordable housing initiative is a joint effort of JBG SMITH (NYSE: JBGS) and the Federal City Council.

REIT magazine profiled JBG SMITH’s launch of the Washington Housing Initiative in its March/April 2019 issue, in which JBG SMITH noted the importance of addressing affordable housing in rapidly gentrifying neighborhoods. The Washington Housing Initiative aims to preserve or build up to 3,000 units of affordable workforce housing in the Washington, D.C., region over the next decade. Housing in the 60 to 100% range of area median income (AMI) tends to be the first type of housing to get pushed out during gentrification, according to JBG SMITH CEO Matt Kelly. “Because there wasn't much in the way of public funds, or infrastructure organized to address this, we took it upon ourselves to try to come up with a better mouse trap,” he says.

JBG SMITH’s Executive Vice President of Social Impact Investment AJ Jackson notes that the goal of the initiative is to try to bring together private and philanthropic capital, and JBG SMITH’s skills and expertise, to create a solution that is “scalable and sustainable, so that other capital comes and repeats the initiative and starts to move the market in a meaningful way.”

As part of the initiative, the Washington Housing Conservancy, a nonprofit, will own and operate the housing. The initiative is also comprised of the Impact Pool, a vehicle managed by JBG SMITH. Capital from the Impact Pool will bridge the gap between traditional mortgage financing and charitable contributions with mezzanine investments.

“There have been policy solutions around affordable housing before, but they just haven't produced enough housing. Most of that housing is not targeted at the core of the workforce, but at lower income households. We really saw this need for people who earn too much for traditional subsidies, but not enough to be well-housed within the region,” Jackson explains.

Kelly readily admits that while the initiative provides a social benefit, there is also an element of self-interest involved. “As a business, doing this really gets to addressing something that we think would otherwise potentially limit the long-term growth of the economy in our city.”

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