Community Reinvestment Fund, Inc. (CRF) is a not-for-profit syndicator of equity investments in various types of real estate projects that stabilize and strengthen the low- and moderate-income communities in which those developments are built.
Since its founding in 1997, CRF has pooled over $35,000,000 of investment capital from dozens of major financial institutions and other large corporations and has used those funds to make equity investments in three types of developments:
- Commercial Properties, consisting of the construction or rehabilitation of shopping centers, mixed-use structures, or other commercial facilities;
- Restored Landmarks, consisting of residential and/or commercial developments that qualify for the federal Historic Rehabilitation Tax Credit; and
- For-Sale Housing, consisting of the construction or rehabilitation for short-term sale of single-family homes, townhouses, condominiums, two- or three-flats, or other housing structures intended for owner occupancy.
CRF invests in these three types of projects in a way that provides its investors with reasonable risk-adjusted returns on investment. Meanwhile, because CRF combines capital from numerous investors and spreads that capital across a diversified portfolio of project investments, CRF's funds can charge CRF's developer clients a lower cost of capital than would be available from a single investor that is forced to assume all of the equity risk of a given project. In addition, because one of CRF's subsidiaries recently received a coveted award of federal New Markets Tax Credits, CRF's most recent funds can make select investments in certain qualified projects at an even lower cost of capital due to the subsidy provided to CRF's investors by the New Markets Tax Credits.
To date, CRF has syndicated investments in three Commercial Properties containing a total of over 120,000 square feet of retail space; one Restored Landmark containing over 40 residential units and over 3,000 square feet of retail space; and approximately twenty For-Sale Housing developments which when completed will contain over 1,000 units of owner-occupied housing.
All of the projects that receive equity capital syndicated through CRF are located in or immediately adjacent to low- or moderate-income census tracts. In addition, for the residential developments in which CRF syndicates equity investments, CRF prioritizes projects that are at least partially affordable to low- or moderate-income homebuyers.
Since it is based in Chicago, CRF has thus far focused its investment activities solely on the Chicago metropolitan area. In the future, CRF will also consider select investment opportunities elsewhere in the state of Illinois and in major metropolitan areas in adjacent states, although the fund will continue to direct the bulk of its investments toward the greater Chicago area.
CRF is an important financial resource for three target audiences: CRF's investors, CRF's developer clients, and the communities that CRF serves.
CRF benefits its investors by providing a low-risk way for them to make equity investments in Commercial Properties, Restored Landmarks, and For-Sale Housing in low- and moderate-income communities. CRF's funds have been designed to enable each investor to pool its funds with capital from numerous other investors and spread the combined investment dollars across a diversified portfolio of properties of various types. In this way, investors in CRF can achieve the goal of investing directly in the communities that they serve, without being required to commit excessive amounts of capital to any single project. At the same time, investing through the innovative and creative financial structure offered by CRF enables financial institutions to get Community Reinvestment Act (CRA) credit under the investment test. As a result of all of these factors, CRF offers its investors a risk-mitigated, CRA-eligible vehicle for investing in important redevelopment activities in their communities, while still realizing reasonable returns on investment and benefiting from the professional underwriting and asset management services provided by CRF.
CRF helps out its developer clients by providing an institutional source of hard-to-obtain equity on reasonable terms. CRF focuses its efforts on experienced, capable developers with strong track records of building in low- and moderate-income communities but without deep pockets or access to other institutional equity sources. CRF-syndicated investments enable such developers either to undertake larger, higher-impact projects than they could otherwise handle or to undertake a greater number of developments than they could otherwise tackle at one time. CRF generally structures its project investments in a manner that insulates CRF's investors from much of the downside risk in case a project does not perform as profitably as expected, while at the same time providing developers with most of the upside potential in case a project's profitability exceeds expectations. In addition to benefiting from the capacity-building power of the institutional capital provided at reasonable cost by CRF and from the ability to profit from the upside potential of their developments, CRF's developer clients also benefit from working with CRF by developing relationships with CRF's financial-institution investors.
CRF's investment activities also confer benefits on the communities in which the fund's projects are located. The Commercial Properties in which CRF's funds invest help revitalize dilapidated neighborhood retail zones, provide needed amenities for area residents, and generate employment opportunities for the surrounding low- and moderate-income communities. The Restored Landmarks in which CRF's funds invest help generate pride and a sense of place – as well as needed economic activity – in even the most distressed communities. And the For-Sale Housing in which CRF's funds invest help stabilize the low- and moderate-income communities in which they are located by providing homeownership opportunities that are affordable to households with lower incomes and by introducing long-term stakeholders to those communities in the form of new homeowners.