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ImpactAssets 50: A Global Landscape of Impact Investment Fund Managers
The ImpactAssets 50 (IA 50) is the first open-source, publicly published database of experienced private debt and equity impact investment fund managers.
https://www.impactassets.org/impactassets-50

ImpactAssets 50

An Annual Showcase of Impact Investment Fund Managers

Kairos Investment
Management Company

Total Assets Under Management: $100 – 499M
Asset Class: Real Estate, Private Equity
Primary UN Sustainable Development Goal: 11 – Sustainable Cities & Communities
Clean Technology, Alternative Energy & Climate Change
Housing & Community Development
Natural Resources and Conservation

Firm Overview

Category: Real Estate

Kairos is an employee owned investment management firm established in 2005 with a long-term orientation to focus on value-based real estate investments, often with a contrarian approach. We make direct investments and provide capital to sponsors through preferred equity, joint venture partnerships, and junior debt positions. Our flat structure enables us to quickly evaluate projects and make investment decisions across several geographic markets. Our philosophy enables us to be both opportunistic and patient with our investments, management approach, and disposition strategies. Kairos promotes a culture of diligence, discipline, and alignment. Our track record includes transactions valued at approximately $1.9 billion, including nearly 14 thousand multifamily units and 13 million square feet. We have offices in California, Colorado, Denver and Alabama.

Firm Headquarters: US & Canada
Years of Operation: 10 years or more
Total Assets Under Management:
$100 – 499M
Total Number of Investors: More than 25
% of Capital from Top 3 Investors: 25% – 49%
Investment Thesis:

Our strategy is focused on identifying affordable housing properties below the size preferred by institutions, located in growing or supply-constrained markets throughout the United States, primed for environmental efficiency improvements and in need of social programs to strengthen their communities. We believe impact is accretive to returns.

Investment Overview:

The Impact Strategy purchases LIHTC (Low Income Housing Tax Credit) assets ignored or mispriced by institutions, mismanaged by developers and owners, that can be improved and run more efficiently, benefiting low-income tenants and communities, while producing an attractive investment return. A large portion of real estate investors focus on new properties with environmentally friendly systems in place. A large opportunity exists to improve older properties with inefficient systems. Replacement systems available are more environmentally friendly, have lower operating and maintenance costs, and lower the overall load on the planet. We partner with local NGOs to offer programs tailored to the needs of the tenancy at each property. Social programs are offered for the benefit of the tenants, to potentially improve their ability to maintain or improve employment, education, and credit, and with the goal of improving the performance of the assets through increased pride of place, lower maintenance and unit turnover costs, and better credit as tenants pay rent more consistently.

Company Differentiator:

We believe our culture is unique in that key employees receive half of their earned year-end bonuses as investments in our strategies, vesting over time. This dynamic creates an alignment of interests in making investment decisions and asset management decisions between the firm’s key employees and LPs, as key employees are LPs.

We demonstrated the discipline to return commitments should the risk outweigh the return potential. Our team is relentlessly focused on downside protection and capital preservation throughout the varying business and economic cycles, concentrating on strong secondary markets with fundamental economic health and demand for affordability.

Most importantly, we have a fiduciary responsibility to place the best interest of our clients above our own interests. We strive to be investor friendly, do not charge asset management fees on capital committed but rather capital contributed, provide allocation capacity protection to the RIAs and consultants with which we work, and offer first right on co-investment opportunities to LPs.

Investment Example

Beacon Hill is a 192-unit multifamily property located in Orlando, FL. The property is 100% income restricted to 60% area median income (“AMI”) by a low income housing tax credit (“LIHTC”) land use restriction agreement (“LURA”) through December 2028. Since tenants have historically been responsible for their own electric bills, savings opportunities at the unit level have been largely ignored. The business plan is to strategically implement impact improvements to reduce tenant electric usage, combined with water/sewer and common area improvements to provide additional savings opportunities at the property level. The total projected cost of these infrastructure improvements is projected to be over $2.7 million, including solar panel installation for 24 residential buildings and the clubhouse. Layering the expected improvements’ costs and returns over original underwriting results in increased projected returns.

*This example is not representative of all investments made within the strategy. Readers should not assume the investment identified is or will be profitable.

Leadership and Team

Cumulative Leadership Experience in Investing:
30 years or more
Cumulative Impact Experience of Top Three Firm Leaders:
10 – 19 years
Carl Chang – Founder & Chief Executive Officer More Info

Carl Chang founded Redwood-Kairos in 2005 after more than 15 years managing the investments and real estate holdings of his family’s investment portfolio. Mr. Chang has directly acquired, developed, and managed over $1 billion worth of retail shopping centers, office, multi-family, and multi-tenant light industrial properties primarily throughout the United States. He has also successfully managed private equity investments in a number of early-stage companies.

Jonathan Needell – President & Chief Investment Officer More Info

Jon Needell joined Redwood-Kairos in 2006 and has served as its Chief Financial Officer and Chief Operating Officer. Mr. Needell is currently President and Chief Investment Officer, responsible for overseeing acquisition and development underwriting and analyses, dispositions, and asset management. Mr. Needell also oversees all strategic and business planning, sourcing and structuring of construction, mini-perm, permanent debt, and joint venture equity financing, financial reporting, and lender and equity partner relations.

Kurt Altergott – Chief Financial Officer More Info

Kurt Altergott serves as Chief Financial Officer of Kairos. He is responsible for all facets of financial, strategic, and operational functions. Mr. Altergott is also involved with strategic and business planning, financial reporting, compliance, sourcing debt, joint venture equity financing, and lender and equity partner relations. Prior to joining the firm, Mr. Altergott was the Chief Financial Officer of MIG, a diversified investment advisor based in Newport Beach, CA where he was responsible for the sourcing and structuring of both the firm’s and for individual fund’s debt and equity raising efforts, risk mitigation and compliance, and lender and investor relations.

Percentage of Investment Professionals who are Women and/or Under-Represented Groups in Firm's Geographic Focus:
50% or more
Percentage of Management Team who are Women and/or Under-Represented Groups in Firm's Geographic Focus:
25% to less than 50%

Financial Performance

Target Financial Returns Relative to Benchmark:
Above Market Rates
Actual Performance Relative to Target Financial Returns in the Past Three Years:
In line with initial target returns
Financial Reporting Frequency to Investors or Donors
Quarterly

Impact Performance

Percentage of Total Assets Under
Management that are Impact Investments:
50% – 74%
Primary Impact Outcomes:
Providing housing
Secondary Impact Outcomes:
Addressing climate change and environmental issues
Increasing access to education and improving educational outcomes
Increasing access to healthcare services and improving health
Promoting arts and media
Value-added Services Offered:
Business and legal training
Financial literacy training
Health services
Education services
Other: Food-based programs, holiday gifting programs, art programs (pottery, gardening, cooking)

Investments systematically target companies where social and/or environmental impact is integral to the product/service being created:

The Impact Strategy only invests in assets providing affordable housing (or market-rate assets that are self-regulated by the fund to provide at least 20% of units at a 25% discount to the average unit price, rented to tenants below specified AMI levels.) 

In addition, the Strategy seeks to invest in assets that are well-positioned to run social programs, and strives to reduce the carbon footprint of existing properties (compared to new LEED certified properties, the development of which is additive to the carbon footprint) by making environmental upgrades focused on water conservation, energy efficiency and waste reduction. 

Investments systematically include social and environmental sustainability practices in the due diligence process:

Our acquisitions effort targets inefficient assets in which we believe we create value (financial, environmental, and social) by introducing more sustainable practices and systems. These features /opportunities are considered within our standard underwriting process.

Impact Tracking and Monitoring

Impact is Tracked:
Yes
Social and/or Environmental Impact is Reported to Investors and Donors:
Yes – to investors and donors
Third Party Validations:
Participant on steering committees or leadership roles within impact industry associations
Publisher or contributor to industry white paper or other research in impact investing

Learn More

Key Contact Name: Anna Reese
Phone: (949) 800-8054
Mailing Address:

30242 Esperanza, Rancho Santa Margarita, CA 92688

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