Citigroup, Inc (NYSE: C) will be investing $100 million in low and moderate income housing projects in a New York City in a move which has drawn cautiously optimistic support from housing advocates that have been critical of other private investments in affordable housing.

The fund plans on focusing on properties in the Bronx, Queens, Brooklyn and Upper Manhattan, said L+M Development Partners CEO Ron Moelis, a New York firm which will manage the fund developed by Citigroup. L+M plans on investing primarily in buildings created for low-income tenants including rent-stabilized buildings which are being foreclose or are in danger of foreclosure.

“There are probably hundreds of properties in New York that meet our criteria,” Mr. Moelis said. “We’ll look to make 15 to 20 investments over the next few years.”

New York City’s Citizens Housing and Planning Council believes that there are about 100,000 rent-stabilized units in New York City which are located in heavily indebted facilities.

Benjamin Dulchin, executive director at the Association for Neighborhood and Housing Development, said that Citigroup’s fund is a step in the right directions, but he will hold judgment to see what investments the fund actually makes. “It’s a distressed-asset fund first,” he said. “Let’s see if it’s able to help the city’s goal in preserving affordable housing.” Mr. Moelis said his fund is seeking “high single-digit to low double-digit returns” and will use less borrowed money than private-equity funds that set their sights on 25% returns.

Moelis said that the fund would screen its building managers to make sure that they don’t have a history of kickoung out tenants with aims to raise rents.. “We don’t want to bring in guys who would end up on the city’s 10 worst landlord list,” he commented

Citigroup is putting up $95 million for the new fund and L&M will provide $5 million.