Logos Faith Nabs $11 Million in Capital

Logos Faith Development, a real estate firm which develops affordable housing projects on underutilized church land, secures an $11 million investment.

Logos Faith Development, a real estate firm which develops affordable housing projects on underutilized church land, secured an $11 million investment comprised of a capital infusion and a revolving line of credit.

The financing, which brings the Westchester firm’s balance sheet to $180 million, will be used primarily for ready-to-issue permit capital and as operational capital, Logos Founder and Chief Executive Martin Porter said. The firm did not disclose the investor, per the organization’s request.

Porter, who is a pastor, founded Logos in 2017 with a focus on affordable housing development in Los Angeles and San Diego. Logos typically finds its project sites through referrals from previous partners. Once a connection has been made, Logos completes a feasibility study and economic analysis and works with the church to create a project plan that aligns with a community’s need and goals.

“We treat each church as an individual organization with a rich heritage and a rich history, and what they’re seeking to do in this moment is to bring that forward through real estate development,” Porter said, adding that Logos’ projects are never “cookie cutter.”

The firm’s development pipeline currently sits at $525 million encompassing more than 2,000 units. One current development includes the Holy Trinity project, which will create 67 units in Florence. Comprised of one- and two-bedroom units, the project site is located near Broadway and West 85th Street.

‘High performing model’

While Logos focuses on faith-oriented projects, Porter made the distinction that the firm is not a charity and operates its business through a “high-performing model,” consisting of cost-saving factors.

First, its projects do not require land acquisitions as land remains under the ownership of the churches that Logos partners with, thus lowering costs. Chris Montes, partner and chief investment officer, stressed that this ownership structure keeps the church’s vision at the forefront of development.

“The churches are also partners in our developments. They’re not just giving up their land; they’re building housing alongside us,” Montes said. “They rely on our expertise, finance, capital markets, capital raising, construction debt, but they’re value aligned and also economically aligned.”

Another cost saver is Logos’ use of private funding, meaning it’s not subject to regulations that come from low-income housing tax credits. Additionally, partnering with nonprofits for its projects allows Logos to receive certain vouchers and tax rates.

“We are trying to maximize the profit of the project while we’re maximizing impact for the community,” Porter said. “When the cornerstone of the model is that you don’t purchase a property and you bring in the nonprofit partners, you derive all the benefits from that nonprofit entity and all the benefits that come from not having to purchase the land.”

Through these strategies, Logos is able to keep its cost per unit at under $325,000 for its developments. Comparatively, in Los Angeles, the cost per unit to build affordable housing in L.A. “regularly tops $1 million,” according to real estate insights platform CoStar News.

Housing: 85th Street project. (Rendering c/o Logos Faith Development)

Porter also pointed to Logos’ value engineers working with its general contractors from the get-go as a differentiator, rather than having the general contractors begin collaborating further along in the project. This allows for a smoother, more aligned process that yields better results, he said.

Logos logistics

Logos typically builds on lots that are 10,000 square-feet or larger and has a targeted internal rate of return of 20% to the church and investors with a 7% yield on cost. Currently, the majority of units are one- or two-bedrooms though Logos is exploring options for three bedrooms. The number of units in Logos projects ranges from about 40 to 140.

“Faith based development done right serves the loss-to-lease and the left out and is highly profitable for investors and for the other partners in the development,” Porter said.

The developments are subsidized through Section 8 vouchers in terms of rent though they are not subsidized by means of tax credit for building. Typical rent follows the county’s guidelines for those making 80% and 110% of the average median income. In Los Angeles for a two-person household, this means a monthly rent that ranges between $1,279 and $2,345, according to the L.A. County Department of Regional Planning.

All of the firm’s properties do receive California Welfare Tax exception, which abates 98% of its tax bill, Montes said.

While the firm’s current building focus is on L.A. and San Diego, Porter finds southern and central states opportunistic for financing.

“We’re flying into the South and the middle states,” he said. “That’s capital country for us and the reason why is so many of those states have foundations and organizations that are faith based.”

In addition to finding funding in “non-traditional areas,” Porter said he expects the Logos team to double in the next two years.