Morgan Stanley has issued a $ 1 billion social bond that will be used to fund affordable housing projects. This is the latest step in the company's commitment to sustainable investing, according to Morgan Stanley.
The announcement follows the company's green bond, issued by Morgan Stanley in 2015, which supports renewable energy and energy efficiency projects. The company has built sustainable financial practices over the past decade and therefore has a track record of creating social bonds that raise capital to invest in environmental and social impacts. The company launched its first public borrowing in 2017 to support opportunities in underserved communities.
The coronavirus pandemic has fueled demand for affordable housing and exacerbated the housing crisis that existed before the pandemic. When the pandemic hit, half of U.S. households were on a rent, meaning they paid more than 30% of their income for rent. However, since the beginning of the pandemic there has been increased activity for affordable projects. In addition, there is tremendous industry support for affordable housing projects. The Institute of Real Estate Management, the Mortgage Bankers Association, and the National Association of Realtors all campaigned for greater relief at Congress.
Morgan Stanley isn't the only company committed to providing a financing option for the affordable housing sector. Avanath Capital Management and MacFarlane Partners recently submitted joint documents with the SEC to form a new REIT, Aspire Real Estate Investor. The new REIT will focus on affordable housing and housing for workers in opportunity zones, and specifically target underserved markets in the US. It will likely be the first Opportunity Zone fund to be listed for trading on a national stock exchange. Initially, Aspire will acquire a portfolio of nine apartment buildings in six states for $ 260.4 million in cash. With development costs, it has a total budget of $ 582.4 million.
Morgan Stanley has a social bonding framework to outline the selection of projects and create a high level of transparency. In addition, Morgan Stanley has hired an independent opinion provider to review the framework and will publish the results directly through the website.