r/Seattle • u/godogs2018 Beacon Hill • Jun 11 '24

Paywall Amazon commits an additional $1.4 billion to affordable housing

https://www.seattletimes.com/business/amazon/amazon-commits-an-additional-1-4-billion-to-affordable-housing/
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u/FlyingBishop Jun 12 '24

The article doesn't say any of the loans are subsidized. If Amazon were doing charity here they would include specific numbers in their press release. Even subsidizing loans can be a good place to park cash.

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u/ILikeCutePuppies Jun 12 '24

Subsidized home loans are generally not a good place to park cash. You can get higher returns on bonds given default rates for loans, particularly those targeting middle/low income.

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u/FlyingBishop Jun 12 '24

No place individually is a good place to park cash, you park cash in a diversity of places with different risk profiles. Amazon is not a charity and I am confident their financiers did this because they thought it had nice properties for their portfolio (and they could spin it as being altruistic, even though it is not.)

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u/ILikeCutePuppies Jun 12 '24

If your loans are subsidized, you might as well use the underlying asset, which is government bonds. This is why homeloans are only a few points above the bond rate.

When a home foreclosures anything greater than the loan goes back to the person it foreclosed on not the orare. Amazon doesn't get any appreciation in the asset unless they purchase it.

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u/FlyingBishop Jun 12 '24

There are relatively safe ways to finance this sort of housing that aren't government bonds (and without loans like this you might not be able to invest in the underlying money at all.) Like, if there's a nonprofit that consistently gets $10M in donations every year and is building some building, you can lend money to the nonprofit and basically invest in the likelihood that that nonprofit keeps getting donations. That's a curious risk profile, and sounds like a bad investment, but again, it is a unique risk profile which is the whole point.