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KingSett Affordable Housing Fund seeks to make big impact

$180M fund acquires Toronto apartment tower, has several active projects and plans for future growth

Birchmount Green, at 1236 Birchmount Rd., in Toronto. (Courtesy KingSett)
Birchmount Green, at 1236 Birchmount Rd., in Toronto. (Courtesy KingSett)

The KingSett Affordable Housing Fund LP has closed on the acquisition of Birchmount Green in the east end of Toronto and is continuing to push ahead with development, and pre-development plans, for other large-scale multiresidential sites in the city.

KingSett Capital is a Toronto-headquartered private equity real estate investment firm that has completed $4 billion of development projects, with another $1 billion under construction, $2 billion in the pipeline and $2.4 billion in entitlement opportunities.

The affordable housing fund was launched in 2020 and has raised $180 million.

The fund's goal is to provide stable risk-weighted returns while delivering high-quality affordable housing in Canada’s core rental markets. It’s backed by a small group of institutional investors and is currently raising additional capital to expand its portfolio.

“There's really no shortage of institutional capital that wants to do this, it’s just finding enough opportunities and enough scale to do it,” KingSett group head of development Jeff Thomas, who serves as the open-ended impact fund’s manager, told RENX in an interview.

Fund pursues several strategies

The fund is governed by an investment committee and will participate in joint ventures, ground-up development, financing initiatives and other structures to address the escalating issue of housing affordability in Canada.

“There's a big lack of both capital and expertise in the field,” Thomas explained. “There’s a a super-complicated series of things you need to do to be able to build buildings like this.”

The KingSett Affordable Housing Fund has a development pipeline of approximately 6,000 housing units.

“To meaningfully change things, you have to come up with a thesis and a business plan that's scalable,” he said. “If it's not scalable, you're kind of doing it one-off piecemeal, 50 units at a time, which is what we've kind of been doing for the last two decades. 

“But if you can dig in and get the right capital and the right strategy, and pull all of that together, you can do that scale which should have a meaningful impact to places like Toronto and Vancouver.”

Birchmount Green

Birchmount Green is a 50/50 joint venture with Mahogany Management on a 220-unit, 100 per cent affordable housing building at 1236 Birchmount Rd. in Scarborough. The property delivers rent-geared-to-income housing, as well as affordable and supportive housing, in conjunction with five not-for-profit agencies.

Toronto-based Mahogany buys, develops, improves and manages multiresidential properties. It has been creating new housing for more than 20 years through working with local residents, the municipality and community agencies to renovate or build affordable and supportive homes.

Birchmount Green offers one- and two-bedroom apartments -- including barrier-free options -- for singles, couples, seniors, families and people with various types of disabilities. Smoking isn't permitted on the property, which has 93 of its apartments filled through community not-for-profit housing partners.

Birchmount Green includes: a large amenity room with access to outdoor greenery and barbecues; an accessible rooftop garden; a library; indoor and outdoor children's play areas; bicycle storage; two offices for support service organizations; and an in-house coffee shop. It’s located 90 metres from a bus stop.

“We hope Birchmount Green can be a replicable and scalable model for supportive and affordable housing,” Thomas said. 

“We've got an ambitious mandate and we'd like to do 10 more of these with Mahogany. We're working on sites where that can work and when the land market is a little soft, as it is right now, it’s a good time to be gearing that up.”

Valhalla Village

The fund is also involved in progressing several other sites.

The proposed Valhalla Village development in Toronto. The two buildings at front would comprise the first phase, while the buildings in shadow would be constructed in a second phase. (Courtesy KingSett)
The proposed Valhalla Village development in Toronto. The two buildings at front would comprise the first phase, while the buildings in shadow (behind and to the left) would be constructed in a second phase. (Courtesy KingSett)

Construction officially began on Valhalla Village, a two-building affordable housing development at Bloor Street West and The East Mall in Toronto, in January. It’s the first ground-up, purpose-built rental housing development for the KingSett Affordable Housing Fund and is scheduled for completion in 29 months. 

The BDP Quadrangle-designed first phase comprises 10- and 29-storey buildings with 494 units, including 172 affordable units, as well as a community agency space and public park. The site is zoned to allow for a second phase at a later date.

“The team is working on some designs and trying to figure out how we can make it work with the greatest depth of affordability,” Thomas said of the proposed second phase.

Valhalla Village is designed to be net-zero carbon through geothermal heating. It will also participate in the new WiredScore Multi-Residential Certification Program.

705 Warden Ave.

KingSett Affordable Housing LP and Greenwin Holdings Inc. are also working to continue advancing the plans for 705 Warden Ave., a property they have jointly held for about three years. They were selected after a competitive market offering process which was launched on behalf of the City of Toronto and CreateTO in 2019. 

The proposed development of the seven-acre site at the time included approximately 275 affordable rental units and 325 market rent units. It will also include the expansion of Warden Hilltop Park, renaturalizing land adjacent to Taylor Massey Creek, new public streets, improvements to the public realm, additional retail space and a child-care centre.

Ten per cent of the units will be deeply affordable, having rents at no more than 40 per cent of the average market rent. The site will also include a minimum of 20 per cent accessible affordable rental units and 15 per cent accessible market rental units.

Construction hasn’t yet begun on the project.

CreateTO was established in 2018 by the city to manage its real estate assets.

Toronto-based Greenwin is a privately owned, full-service property management and development firm established in 1948.

It’s the property manager for more than $3.3 billion in real estate assets. Its portfolio includes more than one million square feet of commercial space and 22,000 residential units, more than 5,000 of which are affordable housing and non-profit housing.

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