US - New York City pension funds have committed to affordable housing by adopting real estate investment principles which allow them to 'opt-out' of investing in individual properties that could adversely affect tenants and affordability.
In addition, they will encourage new affordable housing opportunities to be presented to the pension funds in response to their open RFP for Economically Targeted Investment (ETI) programs, which protect and preserve the affordability of buildings.
ETI objectives are to provide the funds a market rate of return that is commensurate with the risk assumed, to fill capital gaps in New York City, and to provide specific quantitative or qualitative benefits to New York City and, in particular, its low-, moderate- and middle-income communities and populations.
The pension funds, which have assets totaling more than US$110bn, with $1.8bn invested in commercial and residential real estate, have $105m (over 15,000 units) invested in residential properties in New York. They also have $575.9 million invested in ETIs.
New York City comptroller William C. Thompson said the pension funds had been able to combine their commitments to producing strong returns on their investments for New York City retirees, and protecting and creating affordable housing for New Yorkers.
"It is the fiduciary duty of the pension funds to pursue investments that deliver appropriate risk-adjusted returns.
"To date, the pension funds have successfully accomplished both objectives and will endeavor to work with others to increase the city's affordable housing stock."
The New York City pension funds are the New York City Employees' Retirement System (NYCERS), Teachers' Retirement System of the City of New York (TRS), New York City Police Pension Fund, New York City Fire Department Pension Fund and the New York City Board of Education Retirement System (BERS).
Betsy Gotbaum, public advocate and NYCERS trustee, said: "Once again, the investment powers of the funds are being put to good use in addition to maximising returns.
"This new real estate investment principle not only helps bring landlords and developers to the table and holds them accountable, but it demonstrates the funds' firm commitment to protecting affordable housing for low-income New Yorkers."
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