Karen Kelleher
President, BlueHub Loan Fund
Age: 55
Industry experience: 30 years

Connecticut developers that build income-restricted housing and community facilities in low-income communities have a reliable partner in the BlueHub Loan fund run by Boston-based BlueHub Capital. The Nutmeg State ranks second among 23 states in which the fund is active, receiving $23.6 million in 2021 and $17.4 million in 2021 including funding for acquisitions, predevelopment and construction. The fund’s notable recipients include Hartford-based Community Solutions, which received $16 million for its conversion of the Hartford’s vacant Swift Factory into offices, incubator space and commercial kitchens in 2020. Glastonbury native Karen Kelleher took over as president of the loan fund in 2023, following leadership roles at another nonprofit, Local Initiatives Support Corp. Boston, and MassHousing.

Q: What’s the best way to describe BlueHub Capital’s role in the real estate financing ecosystem to people not familiar with the organization?
A: We are a mission-driven nonprofit lender that brings a lot of sophistication and agility to the table to make projects happen, predominantly in the low-income communities and communities of color. We are a national organization and have lent in 28 states. We play an intermediary role between the lenders and the people who have capital.

Q: What are some of Bluehub Loan fund’s notable recent deals in Connecticut?
During 2022, we did four loans and they were all housing deals. Since 2016, we’ve done 29 loans in Connecticut, and the bulk of it is affordable housing, but we’ve also done a health care loan, at least two charter schools and the Swift Factory redevelopment. Our focus tends to be in the low-income communities including New Britain, East Haven, Bridgeport and Hartford.

There’s two ways to subsidize affordable housing: one is to provide public subsidies, and most of what we do is driven by those public subsidies. In Connecticut, there also are incentives for developers to cross-subsidize [such as the Section 8-30g affordable housing law] but those only happen in hot markets. Those don’t happen in depressed markets, because there’s not enough profit.

Q: How is the current investment and interest rate climate affecting demand for your products?
There are always gaps in our world, and they are bigger right now. There is a greater need for affordable housing and more political support, but always not enough resources. Those projects are slowing, and they need more capital to get across the finish line. We are often the early-stage capital lender, such as an acquisition loan, sometimes over 100 percent loan-to-value: certainly above the 80 percent that banks are willing to take on. Our borrowers don’t always have deep pockets. As rates have come up, it’s very difficult to come to the table. Our cost of capital is going up too, so we have to be creative. Sometimes we take a subordinate lien that acts as a gap filler for developers that are doing really impactful projects.

Q: What are your immediate goals for the BlueHub fund?
I want to make sure I can raise the capital I need for our pipeline. Our EQ2 product is a way for [Community Reinvestment Act]-motivated banks to make an investment commitment for a longer period of time. It’s low return, but they get CRA credits every quarter. It’s a powerful tool and a great start to a relationship for a bank that may not already be investing with CDFI’s. We just had our biggest year ever from a lending volume perspective and expect to continue to grow our team and our pipeline. That gives us the opportunity to be more engaged.

Kelleher’s Top 5 Ways to Celebrate Spring

  1. Visit Boston’s Custom House Tower observation deck.
  2. Explore city parks.
  3. Take lunch to the on a rooftop garden.
  4. Stroll any part of the Boston Harborwalk.
  5. Go on an art wal.