Seeking Profits With a Purpose

Turner Impact Capital’s Bobby Turner established the Turner MultiFamily Impact Fund to invest in affordable housing for the working class, with an eye toward market-rate returns.

Robert “Bobby” Turner, the CEO of Santa Monica, California–based Turner Impact Capital, has formed the Turner MultiFamily Impact Fund, raising nearly $300M.

The object of the fund is to create affordable workforce housing in urban areas, with capital coming from investors including the Rockefeller Brothers Fund, University of Michigan Endowment, Persian Square Capital, and Citi Community Capital.

“There are very few people addressing workforce housing,” says Turner, who also has social impact partnerships and investments with athletes Andre Agassi and Earvin “Magic” Johnson Jr. “There are 43M renter households in America. That number will increase by over 5M households in the next 10 years. The vast majority of the growth is coming from primarily low- and moderate-income families.”

Turner says more than 25 percent of renters spend more than 50 percent of their income on rent, at the expense of healthcare and food security. The Turner MultiFamily Impact Fund is focused on those workers—like nurses, teachers, municipal workers, and law enforcement—who can’t afford to live in the communities in which they serve.

“The reality is there is this huge demand for affordable work housing for consumers who make too much money to qualify for subsidized housing,” says Turner.

Typically, social impact investing has been not-for-profit, but Turner’s fund is for- profit, and he believes that making money and causing change need not be mutually exclusive.

“In an environment where interest rates are 1 percent, our social impact funds can generate between 10 and 12 percent returns on net fees,” he says.

Turner says social impact vehicles tend to underperform in a bull market, but they will always outperform in a bear market because of the lack of correlation among the broader market indices.

“We know that regardless of what happens to the Dow Jones Industrial Average, regardless of where employment—or unemployment—is, and regardless of where inflation is, the demand for housing will not disappear,” he says. “So therefore social impact can drive better risk-adjsuted returns and drive true alpha.”

The fund’s mission is to preserve the existing stock of housing in communities where low-income and subsidized multifamily properties come off of compliance periods and into the market.

Those properties are often bought up by opportunistic investors who will usually make high-end improvements and ultimately raise rents. Turner says his model is to buy those properties and keep rents stabilized by reducing overhead and making community improvements, not material ones.

“What I think we’ve proven over the last 20 years with my partnerships with Magic Johnson and Andre Agassi is that doing good and doing well are interdependent,” he says. “There is a symbiotic relationship between profits and purpose.”

Turner believes that by having workforce housing in close proximity to schools and industry, the economy will benefit.

“When parents are working two and three jobs and are still spending 50 percent of their income on housing, there comes despair,” he says. “After despair comes hopelessness, and that leads to violence. Workforce housing is crucial to society. This new affordable-housing fund is extremely important to me.”