Union Pension Money Funds San Francisco Housing

Jon Peterson

The Washington, D.C.-based AFL-CIO Housing Investment Trust is betting long on San Francisco: With the completion of a $70 million loan to Emerald Fund Inc., the union pension-fund manager has invested $107.6 million in the city in the past 18 months in three apartment developments.

The trust is now considering a fourth apartment development on a Mid-Market Street site near the new Twitter Inc. headquarters, said Ted Chandler, chief operating officer for the open-ended, commingled investment company. “We are also looking at investing in other housing developments throughout the San Francisco Bay Area,” he said.

The Emerald Fund is building the 326-unit 333 Harrison Street complex south of Market Street, a $105 million project. The site is near the Transbay Transit Center, a redevelopment area slated to be a major public transport hub including new housing and other development. The pension fund closed the transaction in the last 10 days.

“We were always interested in the area where this project is located,” Chandler said. “The announcement last year by Salesforce.com for us was just a validation of the strength of the market and the demand that there will be for housing in that marketplace in the future.”

The project will be constructed with 100 percent union labor and should be complete in 24 months. It is expected to create 600 jobs. Eighty-five percent of the units will be leased at market rate; the remainder will be leased as affordable-rate units to families whose earnings constitute no more than 30 percent of the area median income.

Last year, the housing trust lent $35 million for construction and permanent financing of the Arc Light Co. residences at 178 Townsend St. in the South Beach area. The 94-unit complex should be finished by August 2012. It also made a $2.6 million construction and mini-permanent loan on the 196-unit Potrero Launch development at 23rd and 3rd streets in the Central Waterfront. This development should be complete no later than the end of next year. Both projects are to be LEED certified with a 20 percent affordable component.

Last year the trust completed investments totaling $613 million, a record for investing capital in a 12-month period. The total assets in the trust are $4 billion.

Besides union pension funds, the trust manages capital from big institutional investors such as large public pension funds, foundations and endowments. It invests in single-family and apartment projects, new development and redevelopment. Besides San Francisco, it places money in Boston, Chicago, Milwaukee, New York, St. Louis and Minneapolis/St. Paul.

The investment in 333 Harrison was one of the largest the company has ever made, Chandler said.

West Coast Commercial Real Estate News