MSquared Completes $139M First Close for National Housing Fund

MSquared, a women-owned real estate investment and development platform dedicated to creating mixed-income housing, has completed a $139 million first close for a national mixed-income housing fund dedicated to bridging the gap between luxury and affordable housing nationwide, the company said in a statement to Commercial Observer.

The company was founded in 2020 by Alicia Glen, who developed and financed over 125,000 affordable homes when she served as deputy mayor of New York City from 2014 to 2019.

The fund, Equitable Housing Solutions Fund II (EHSF II), will focus on transit-oriented sites and directing capital to women- and minority-led firms. With a target of $250 million, EHSF II aims to finance over $1 billion of new mixed-income housing.

EHSF II has already closed on investments in Dallas and Everett, Wash., that will be developed by women-led firms, and together will deliver over 500 new units, half of which will be affordable.

“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 Glen, MSquared’s managing principal. “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.”

In addition to anchor investor Citi Community Capital, investors in the fund include Bank of America, Trinity Church NYC, Capricorn Investment Group and Deutsche Bank.

The MSquared announcement highlighted several unique aspects of the fund compared to other private equity funds with similar aims, including its emphasis on ground-up development versus acquisition, and an intentionally nonpartisan focus that will target “high-growth cities in both red and blue states.”

MSquared also emphasized its focus on community building within its projects, noting that it seeks to “invest in projects with commercial components devoted to residents’ needs, such as day care centers, space for local nonprofits, and small businesses whose services are critical to the vitality of the neighborhood.”

The fund’s investors were attracted in part due to the uniqueness of the fund’s ultimate goals. 

Jeremy Johnson, head of Citi Community Capital, said in the statement that “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.”

Meredith Jenkins, chief investment officer for Trinity Church NYC, noted in the statement that, “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.”

The company’s first fund, EHSF, was a $200 million fund that invested in 14 deals with a current estimated asset value of over $1.5 billion.

This article has been updated to account for a last minute update on the first close amount provided by MSquared.

Larry Getlen can be reached at lgetlen@commercialobserver.com.