MSquared completes $139 million first close for housing fund

Manhattan, NY MSquared, a women-owned real estate investment and development platform, made known a $139 million first close for its Equitable Housing Solutions Fund II (EHSF II), which will invest in the development of mixed-income, mixed-use projects in cities nationwide. MSquared raised capital from a range of repeat and new partners including, anchor investor, Citi Community Capital, as well as Bank of America, Trinity Church NYC, Capricorn Investment Group, and Deutsche Bank, among others. With a target of $250 million, EHSF II aims to finance over $1 billion of new mixed-income housing. 

“By focusing on providing mixed-income housing in high-growth, high-cost areas, this fund both addresses the breadth of the affordability crisis and capitalizes on an investment opportunity not otherwise available in the private markets,” said Alicia Glen, founder and managing principal of MSquared. “Having been in the real estate business for decades, it’s clear that the traditional approach to housing development is not working and it’s time to do things differently - that means investing in innovative projects and ensuring that underrepresented developers and operators are part of the solution.”

“We are proud to be a lead investor in MSquared’s Equitable Housing Solutions Fund II (EHSFII), which develops mixed-income housing in growing, supply-constrained markets,” said Jeremy Johnson, head of Citi Community Capital.

“Financing affordable, workforce, and mixed-income housing nationwide is our top priority. By prioritizing new units and focusing on mixed-income projects, EHSF II stands out from other housing funds to deliver social impact and long-term value in communities across the country.”

“Affordable housing is the cornerstone of thriving, equitable communities and we believe EHSF II will catalyze this type of development that so many cities around the country urgently need,” said Meredith Jenkins, chief investment officer for Trinity Church NYC. “This fund reflects our values by building long-term affordability in high-growth, high-opportunity areas. MSquared is disrupting the status quo of traditional real estate investment and we are pleased to partner with them again to advance our shared vision for inclusive development.”

In addition to providing capital to women and minority-led development firms, who are underrepresented in the industry, EHSF II is differentiated from other real estate funds in several aspects. Unlike many housing funds, EHSF II prioritizes ground-up development, and combines market-rate units alongside affordable units, taking advantage of the investment benefits of both markets. Beyond housing, EHSF II will focus on community-building by aiming to invest in projects with commercial components devoted to residents’ needs, such as daycare centers, space for local non-profits, and small businesses whose services are critical to the vitality of the neighborhood. EHSF also promotes sustainability by investing in transit-oriented development and incorporating green building practices.

EHSF II is the successor to MSquared’s first vintage of $200 million, which invested in 14 deals that have a current estimated asset value of over $1.5 billion. EHSF II has already closed on investments in Dallas, Texas and Everett, Washington, which will deliver a total of over 500 new units, half of which will be affordable, requiring both income-testing and rent-restriction. Both projects are with previous MSquared partners, and both are being developed by women-led firms, reflecting the firm’s ongoing commitment to directing capital to underrepresented developers in the industry.