From housing to education, BlueHub Loan Fund borrowers are finding inventive ways to address systemic challenges. But trailblazers often have to navigate obstacles.

At BlueHub Loan Fund, we consistently seek ways both to manage risk responsibly and to maintain the flexibility to fund large and small real estate development firms, public charter schools, healthcare centers, community development corporations and other entities that are building the spaces that make neighborhoods more vibrant.

We carefully research each of our investments, gaining a deep understanding of the market. We engage with local leaders to understand the impact of proposed projects. We work closely with our borrowers to ensure they have access to the capital and resources they need to get their projects off the ground. And most importantly, we build strong public, private and community partnerships.

Our borrowers tell us this willingness and ability to be a long-term partner is a key reason they return again and again. As development life-cycle lenders, we not only support the same borrowers, but often the same projects at various stages, evolving with our clients to meet their needs. Consider Compass Rose Public Schools in San Antonio, Texas. BlueHub Loan Fund made its first loan to Compass Rose in 2020 for the public charter school's flagship campus. As the school has expanded across seven campuses, we have made six additional loans. In 2023, while underwriting a construction loan for a new campus, shifting demands by the seller required us to pivot. We ultimately provided both an acquisition loan and a subsequent construction loan. This is typical of the responsive role we play, filling gaps that others can’t, making it feasible for borrowers to move forward.

2023 was a banner year for BlueHub Loan Fund with $170.5 million in lending, surpassing our goal of $110 million. It was a productive and demanding time. S&P Global Ratings updated our financial outlook from ‘A’ to ‘A+’, citing increased equity and above-average profitability. Further, we received nearly $5 million in grant funding from the US Department of Treasury’s Community Development Financial Institutions Fund’s (CDFI Fund) Equitable Recovery Program. We will use these funds to continue addressing housing insecurity for low-income people, focusing on areas that were hit hardest by COVID-19.

As of 2023, we’ve made investments in 23 states and Washington DC, doubling our footprint over the past eight years. As we expand our reach and our partnerships across the country, we target our financing to support projects that have high impacts on low-income communities. We might start by filling a funding gap for new charter schools in a particular state, building a partnership with a local funder that then expands to include housing or health center loans. Or we might follow a borrower from one state to another, driving innovation by adapting a product or strategy we’ve used together in a different place.

BlueHub Loan Fund received $15 million from the Department of Education in 2023, making us one of only five recipients of a Credit Enhancement Award. That honor is reflective of our unique standing in charter school financing and our extensive experience lending to both mature and early-stage schools. New schools in particular require very flexible early-stage financing, capital many lenders aren’t able to provide.

Complex lending situations are not limited to schools. In many areas, the existing physical built environment no longer meets the community’s needs — or has never been sufficient. Our borrowers are transforming those assets, repurposing malls into schools and motels into apartments, as you will read later in this report. Yet, the conversions face a raft of challenges, from plumbing to infrastructure. Likewise, new builds may face zoning and permitting setbacks, budget overruns and other complications. Our deep experience with construction issues of all kinds, coupled with our patient capital, helps our borrowers meet challenges as they arise.

As our work continues to evolve, so does the profile of BlueHub Loan Fund itself. With new leadership in place, we are expanding our team to be both geographically and experientially diverse. We are enhancing policies and honing practices to retain agility while building the best-in-class infrastructure. The result will enable us to scale our lending, bringing an even more effective support structure to changemakers nationwide.