South L.A.-based SoLa Impact has raised more than $250 million for its fourth fund, dubbed the “Black Impact Fund,” anchored by a $50 million commitment from California State Teachers’ Retirement System (CalSTRS). The fund will close once it hits $300 million.
The CalSTRS investment was announced March 1. It is being made through the pension fund’s joint venture with Sherman Oaks-based Belay Investment Group.
SoLA Impact, which is a minority-led real estate fund, is focused on affordable and workforce housing in California’s Black and brown communities.
Other investors in the group’s Black Impact Fund include Palo Alto, Calif.-based PayPal Holdings Inc. and Skoll Foundation, New York City-based Equitable Holdings Inc. and Potenza Capital, Sandy, Utah-based Ally Bank, Irvine-based Pacific Premier Bancopr Inc. and Syracuse, N.Y.-based Adirondack Capital Advisors.
“We’re thrilled about it,” Martin Muoto, chief executive of SoLa Impact, said of the investment.
Homelessness and a lack of affordable housing are issues that SoLa Impact plans to address with the fund by creating thousands of affordable and workforce housing units.
SoLa Impact has already invested in the development of more than 3,000 affordable and workforce housing units, largely in L.A. The organization processes Section 8 vouchers and offers social programs through its affiliated nonprofit, the SoLa I Can Foundation.
Muoto said South L.A. has an incredibly old housing stock that SoLa Impact is trying to rebuild and expand.
He said the Black Impact Fund would allow the company to create 3,000 to 4,000 new units of affordable and workforce housing.
Muoto said it was significant that a group of CalSTRS’ size invested because “it’s critical for institutional investors to invest in these communities, which has historically been a challenge.”
More companies, he said, would likely follow CalSTRS’ lead and look at similar types of funds.
Kirsty Jenkinson, investment director for CalSTRS’ Sustainable Investment and Stewardship Strategies program, said that the investment aligned closely with the program’s goals.
“Our mission is to provide a secure retirement for California’s public educators and beneficiaries,” Jenkinson said in a statement. “Our dedicated portfolio seeks to achieve superior financial returns while creating demonstrable social and environmental outcomes.
The investment with SoLa Impact is our first real estate investment within SISS and aligns with our goals. We are delighted to work with the SoLa team, our colleagues in the CalSTRS Real Estate team and our partners at Belay to expand affordable and workforce housing in California.”
Eliza Bailey, Belay’s managing principal, said the company was “impressed with the senior team at SoLa Impact” and “with the positive change they continue to affect in Los Angeles through their affordable housing investment strategy and related social programming.”
The Sustainable Investment and Stewardship Strategies program was an example of environmental, social and governance investing, or ESG, Muoto said. A lot of companies, he added, are interested in ESG investing but have focused on green investments rather than affordable housing. He called CalSTRS’ investment “a very important milestone” of a respected group investing in something that will “have a positive impact on society.”
