Hillpointe, LLC Raises $510 Million for Hillpointe Workforce Housing Partnership IV, LP
Hillpointe, LLC, a fully integrated real estate development and investment firm focused on the development of market rate workforce housing in the Sun Belt region of the United States, announced today the closing of Hillpointe Workforce Housing Partnership IV, LP (“Fund IV”) at its hard cap of $510 million. Fund IV is expected to allow for the development of the next 25 to 30 workforce housing projects in Hillpointe’s pipeline, representing approximately $1.4 billion of total asset value and 8,000 workforce housing units across the Sun Belt.
“Hillpointe's successful fundraise and the expansion of our investor base marks yet another significant milestone for our growing company and furthers our mission to deliver best-in-class new apartments that are competitively priced for workforce tenants,” noted Steven Campisi, Co-Founder and Managing Partner of Hillpointe. “As with prior funds, Fund IV seeks to provide investors with the opportunity to benefit from Hillpointe’s fully integrated development platform, and our owner-operator business model, to generate attractive risk-adjusted returns. We believe our fully integrated structure is the key to our construction cost advantage and successful execution at initially budgeted cost.”
Hillpointe believes that the U.S. workforce housing sector exhibits a meaningful supply/demand imbalance. Workforce housing is generally defined as housing that is affordable to households earning between 60% and 120% of area median income, or about $45,000 to $85,000 annually. Over the last several decades affordable rental housing largely disappeared, with quality rental housing options increasingly restricted to top-end luxury renters. Due to rising construction costs, the majority of newly developed rental units are unattainable for median income earners, with the workforce housing component representing only a small fraction of newly developed units. When combined with general obsolescence, which removes an estimated 100,000+ units per year, there is an acute shortage of workforce housing.
“Over the past two years, our ability to control construction costs has differentiated us from our competitors,” said Kelly Mahoney, Co-Founder and Managing Partner of Hillpointe. “We have a wealth of great sites in our pipeline, our construction process is streamlined, and our supply chain has been optimized. In addition, we have further expanded our direct-to-manufacturer supply chain, both domestically and internationally. We look to continue to increase our competitive advantage versus our peers and believe that we are well positioned to execute on our forward pipeline of 25 to 30 workforce housing projects.”
“Fund IV was oversubscribed, surpassing its initial fundraising target, and has garnered tremendous support from both new and existing investors. We believe the successful raise underscores institutional capital’s strengthening demand for workforce housing and continued confidence in Hillpointe’s development and construction expertise,” commented Jeff Goll, Managing Director and Head of Capital Markets. “We are grateful for the continued trust that our investors have placed in us, and we remain highly committed to delivering outstanding results.”
The Hillpointe Workforce Housing Partnership IV, LP exceeded its $500 million target and achieved its hard cap of $510 million. There was no placement agent for the Fund. Greenberg Traurig, P.A. serves as legal counsel. Juniper Square serves as fund administrator.