SDS Impact Debt Fund

In the ongoing quest to address America’s critical shortage of affordable housing, Los Angeles-based impact fund manager SDS Capital Group is stepping up again—this time with a new financing platform called SDS Impact Debt (SDSID). The goal is clear: Provide flexible, below-market permanent and construction financing to preserve or develop affordable units nationwide. Over the next 18 months, SDS expects the platform to finance more than $1 billion worth of new units.

A One-Stop Shop for Affordable Housing Financing

Historically, affordable housing developers often piece together funding from multiple sources—an approach that can be costly and time-consuming. By offering construction and permanent financing under one roof, SDSID aims to simplify the capital stack for developers.

“If we can be a one-stop shop in some geographies where we provide both products, we can eliminate the need to chase a range of funding programs—which cuts the time and expense of chasing a more complex capital stack.”
— Deborah La Franchi, Founder & CEO of SDS Capital Group

La Franchi noted that SDS was founded on the mission of leveraging private-sector capital to combat poverty—a principle that remains at the core of the firm. The new SDSID platform expands on that legacy, enabling cost-effective financing solutions across the affordable housing spectrum.

Leadership and Vision

To drive this new initiative, SDS has appointed Jason Riffe as Managing Director of SDSID. Riffe’s experience includes leading affordable housing financings across the West Coast, with more than $230 million in capital deployed and $900 million leveraged in community-impact investments. His deep background and track record in affordable and workforce housing make him a natural fit to lead SDSID.

Capital Structure and Terms

A key feature that sets SDS Impact Debt apart is its novel structure, utilizing corporate bonds and corporate notes sold to institutional investors through financial institution partnerships. Here’s a quick overview of what that means for developers:

• Variety of Private Asset-Based Products
  Financing for a single property or a pool of assets, with terms ranging from 3 to 40 years.

• Competitive Pricing
  Rates are about 150 to 250 basis points below current retail debt offerings.

• High Loan-to-Value Ratios
  Up to 90% LTV, with loans starting at $25 million.

The flexibility provided by these financial terms can help more deals pencil out—especially critical given the headwinds of high construction costs, rising interest rates, and general economic uncertainty.

Addressing a Nationwide Shortage

SDSID’s initial focus includes closing six financings for 1,427 units of multifamily housing—54 percent of which will be affordable to families earning up to 80 percent of the Area Median Income (AMI). And these units couldn’t be coming at a better time. The U.S. faces a shortfall of 5 to 7 million affordable units, making innovative financing options more important than ever.

“When you can make both of the key elements of the capital stack attractively priced, more deals can get done, which in turn increases the velocity and volume of affordable housing units being financed and built across the country.”
— Deborah La Franchi

SDS’s Broader Impact Footprint

SDS Capital Group is no stranger to impact investing. With $1.7 billion in assets under management, the firm has invested in over 8,000 housing units nationwide—72 percent of which are either affordable or dedicated to permanent supportive housing for people experiencing homelessness.

Among the firm’s active funds are:

• Develop Michigan Real Estate Fund

• American South Real Estate Fund I and II

• SDS Supportive Housing Fund

Earlier this year, the firm’s joint venture—American South Fund Management—closed American South Real Estate Fund II with $174 million in commitments to advance affordable housing investments throughout the South. In January, it also provided an $18.8 million investment for the acquisition and renovation of a 1,068-unit portfolio in North Carolina and South Carolina, ensuring that units remain affordable to households earning 60 percent or less of AMI.

Why It Matters

The SDS Impact Debt platform represents a fresh, private-sector-driven solution to a nationwide challenge. By offering low-cost financing and streamlined capital stacks, SDS aims to help developers build and preserve affordable housing at a faster pace—an essential step if we hope to close the staggering multi-million-unit gap.

Amid rising costs, interest rates, and economic uncertainty, the ability to lock in stable, long-term financing at favorable rates can be the difference between a project that remains on the drawing board and one that breaks ground. SDSID could help more of those developments make it across the finish line, ultimately offering a lifeline to households priced out of the traditional market.

“Currently, with construction costs and interest rates at such high levels, and coupled with tariff and the uncertainty surrounding the overall market, as well as government financing programs—it is even more imperative that we put out attractively priced private-sector solutions for affordable housing.”
— Deborah La Franchi

Looking Ahead

SDS Capital Group’s expansion into SDS Impact Debt suggests a new wave of innovation in affordable housing finance—one that marries impact investing with streamlined and cost-effective solutions. As more deals close under this platform, the hope is that it will accelerate the creation and preservation of desperately needed units.

For affordable housing developers, it’s worth keeping an eye on how SDSID’s below-market financing boosts project feasibility and addresses the pressing need for quality housing that lower- and middle-income families can afford.

Bottom line: The more inclusive and flexible the financing, the closer we get to bridging America’s affordable housing gap. And with SDS Capital Group’s latest initiative, the industry takes another significant step toward that goal.