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Business Mar 02, 2022
Martin Muoto, Chief Executive Officer of SoLa Impact. | Courtesy photo
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SoLa Impact, a leading minority-led real estate fund focused on affordable and workforce housing in California’s Black and brown communities announced that the California State Teachers’ Retirement System (“CalSTRS”), the world’s largest educator-only pension fund, via their joint venture with Belay Investment Group, has anchored SoLa’s second close with a $50 million equity commitment into its “Black Impact Fund.”
CalSTRS’ investment combines commitments from the pension fund’s Real Estate and Sustainable Investment & Stewardship Strategies (“SISS”) units through its partnership with Belay Investment Group, CalSTRS’ emerging manager conduit.
With the investment, CalSTRS joins other leading institutional investors such as PayPal Holdings, Equitable Insurance, the Skoll Foundation, Ally Bank, Potenza Capital, Pacific Premier Bank, Adirondack Capital and senior partners of some of the nation’s premier private equity firms that have collectively invested over $250 million in SoLa’s Black Impact Fund. The fund plans to formally close once it reaches its $300 million target.
“We are honored to have CalSTRS anchor our second close with such a significant commitment,” said Martin Muoto, Chief Executive Officer of SoLa Impact. “We looked for a mission-aligned investor that operates in a true partnership with emerging managers, has an appreciation for the diversity of our team, and has deep experience in institutional investing. CalSTRS and Belay are a perfect fit for SoLa Impact.”
“Our mission is to provide a secure retirement for California’s public educators and beneficiaries,” said Kirsty Jenkinson, CalSTRS’ SISS investment director. “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.”
“After extensive due diligence, Belay has been impressed with the senior team at SoLa Impact, their thoughtful, disciplined approach to building their platform, and with the positive change they continue to affect in Los Angeles through their affordable housing investment strategy and related social programming. While their track record speaks for itself, we believe that SoLa is an organization that helps prove that ‘Doing well by Doing good’ is a viable business model. And Belay is particularly aligned with their commitment to investing in historically overlooked Black and brown communities, as well as their deep engagement with the communities in which they invest,” said Eliza Bailey, Belay’s Managing Principal in charge of Investment Team activity.
To date, SoLa Impact has invested in the development of over 3,000 affordable and workforce housing units located primarily in Los Angeles. SoLa’s strategy includes the renovation of existing multifamily properties, as well as new ground-up construction projects in Black and brown communities.
SoLa takes a somewhat unique approach to invest in market-rate workforce housing by embracing Section 8 vouchers and going beyond housing, using SoLa’s social programs offered through their affiliated non-profit, the SoLa I Can Foundation, that provide practical solutions for ending homelessness by equipping tenants with vocational training, financial counseling, scholarships, and pathways to self-sufficiency.
“Over the last several decades, demand for affordable housing in California has far outpaced supply, and SoLa’s strategy directly addresses this issue,” said Julie Donegan, a portfolio manager for CalSTRS’ Real Estate team. “SoLa’s replicable development model and strong in-house capabilities enable them to deliver quality new construction at a cost basis that allows for attractive investor returns while offering rental rates that low- and middle-income residents can afford. SoLa’s model has demonstrated that a high-caliber operator with a disciplined investing approach, combined with intentional social impacts, can deliver returns that benefit investors and community members alike.”
“If we’re going to end homelessness and build a more equitable city, we need to partner across sectors and bring all of L.A.’s creativity and innovation to bear,” said Los Angeles Mayor Eric Garcetti. “SoLa Impact is poised to double down on the important work it’s doing to both build much-needed affordable housing in underserved communities and provide Angelenos with the tools they need to transform their lives.”
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