It is our pleasure to report to you on the fourth year of operations for the Living Cities Catalyst Fund. The Fund currently has loan commitments of $34.6 million from ten investors. Since inception, our total cumulative lending of $24.65 million has sparked initiatives with total funding of nearly $400 million.
In recognition of our work and our engagement with the social impact fi eld, we also are delighted to report that the Catalyst Fund was selected for the second year for the ImpactAssets 50 – a public database of private debt and equity fund managers that deliver social and environmental value in addition to financial returns.
Other key developments of the year included:
New Investments: This year, we closed two additional loans to borrowers participating in Living Cities’signature Integration Initiative. We expect to close the final loan in this program in the next few months. In addition, we provided a $2MM increase to our loan to Craft3 to support their industry leading single family energy efficiency retrofit program in September 2012.
Providing Flexible Capital: We continue to look for ways to support our borrowers who are working to create opportunities and benefits for low-income communities. This year, we made a policy decision to decrease the rate charged to all of our Integration Initiative borrowers to 2% - the lowest rate the Catalyst Fund has ever charged. As these borrowers are working in weak market cities with declining subsidies, we hope this rate decrease can help unlock transactions and increase the pace of deployment.
Operational Improvement: We are happy to report that in June 2012 several of our investors – Casey, Deutsche Bank, Kresge, MacArthur and Robert Wood Johnson – decreased the interest rates they charge to the Fund to 1%. RWJF has also accepted a temporary return of capital. These actions help increase the Fund’s overall self-sufficiency. We expect to save over $120,000 per year in interest expense.
Integration with Program: We increasingly recognize the value of more tightly coordinating the Catalyst Fund’s activities with Living Cities other programmatic activities. As such, staff has dedicated significant time this year to integrating the Catalyst Fund work with our program work. As part of our recognition as an ImpactAssets 50 fund, we will soon be releasing an Issue Brief which explores the potential for greater coordination between impact investments and grants to increase the flow of capital to the critical social and environmental issues confronting our world today.