Housing entity issues $100 million in sustainability bonds
LONDON: There is a growing trend to use sustainability bonds to underpin multi-generational rejuvenation site development.
Michael McCann BRIDGE Housing is partnering on the Balboa Reservoir development in San Francisco, which will transform a 17-acre parcel into 1,100 homes, with half being affordable/workforce housing, including educator housing. Plans also feature a child care center, a two-acre community park, transit improvements, and other amenities. It is among the projects that could benefit from the nonprofit developer’s $100 million sustainability bond transaction.
BRIDGE Housing has closed on $100 million in taxable bonds, Series 2020 sustainability bonds, announced the firm.
The nonprofit affordable housing developer and owner will use the bond proceeds for predevelopment, development, and acquisition of multifamily housing that fit within its Sustainability Bond Framework of affordable housing, transit-oriented development, green building, and energy efficiency. BRIDGE Housing operates in California, Oregon, and Washington.
“This impact bond brought ESG (environmental, social, and governance) investors to the table to invest in affordable housing,” says Cynthia A. Parker, president and CEO of BRIDGE Housing. “The new capital will accelerate our 9,000-unit development pipeline of affordable housing, which is fundamental to economic and social recovery and growth. We know that the families and seniors we serve gain stability not just from an affordable place to live, but also from the on-site support services we provide.”
The transaction is the first taxable social bond offering by a nonprofit housing developer, according to officials.
Some community development financial institutions have been in the marketplace with similar transactions to recapitalize their loans funds but no affordable housing developers, Parker says.
BRIDGE embarked on a process that included engaging an underwriter and getting its offering rated. “It allowed us to enter a world where there’s a group of investors who are looking at impact,” she says. “What’s more impactful than affordable housing?”
The offering drew ESG investors, who asked detailed questions about rent collections, plans for when the COVID-19-related eviction moratoriums expire, and the types of properties that may be funded with the proceeds, according to Parker.
The offering was well received and oversubscribed, drawing about $170 million in interest, Parker says. BRIDGE Housing’s track record and capacity as well as the low interest rate environment were factors in the recent transaction.
Other developers may look at the organization’s example and follow with similar bond deals to fuel their investments in affordable housing.
“We need to start looking up and not down if we really want to amp up our housing delivery system,” says Parker, who used to be a bond underwriter.
The bond offering, underwritten by Morgan Stanley, cited BRIDGE’s general obligation rating of A+ (stable) from Standard and Poor’s and an opinion from Sustainalytics, a third-party sustainability rating organization: “The BRIDGE Housing Sustainability Bond Framework is robust, transparent, and in alignment with the four core components of the Green Bond Principles (2018) and Social Bond Principles (2020).”
Sustainalytics noted that BRIDGE’s framework will contribute to the advancement of the U.N. Sustainable Development Goals of reducing poverty and inequality, and promoting affordable and clean energy and sustainable cities and communities.
The bonds are expected to mature in 2030.
