December 4, 2015
The Urban Land Institute has issued Preserving Multifamily Workforce and Affordable Housing: New Approaches for Investing in a Vital National Asset. Stockton Williams, the Executive Director of the ULI Terwilliger Center for Housing, opens the report with a Letter from the Author,
Real estate investors seeking competitive returns increasingly view lower- and middle-income apartments as an attractive target for repositioning to serve higher-income households. In response, creative approaches are emerging for preserving the affordability of this critical asset class for its current residents and those of similar means—while still delivering financial returns to investors.
This report from the ULI Terwilliger Center for Housing provides a broad-based overview of this rapidly evolving landscape. It profiles 16 leading efforts to preserve multifamily workforce and affordable housing, including below-market debt funds, private equity vehicles, and real estate investment trusts.
Collectively, the entities leading these efforts have raised or plan to raise more than $3 billion and have acquired, rehabilitated, and developed nearly 60,000 housing units for lower- and middle-income renters, with thousands of additional units in the pipeline. Several are actively raising more capital to expand their activities. They are meeting a pressing social need while delivering cash-on-cash returns to equity investors ranging from 6 to 12 percent.
The report is written with the following primary audiences in mind:
■ Developers and owners looking for new sources of capital to acquire, rehabilitate, and develop multifamily workforce and affordable properties;
■ Local officials and community leaders seeking options for attracting or creating new sources of financing to meet their rising rental housing needs for lower- and middle-income families; and
■ Real estate investors and lenders interested in more fully understanding their range of options for a product type that offers financial as well as social returns.
As the country continues to grapple with the worst housing crisis for lower- and middle-income renters it has ever known, the private sector and community-based institutions must play an ever-greater role in ensuring that existing affordable properties remain available to the many who need them, while doing what they can to produce new units where possible. The financing vehicles profiled here show what is possible and suggest opportunities for further progress. (iv)
I found Part II particularly useful, with its overview of financing vehicles. Many readers of this blog will benefit from a description of below-market debt funds, private equity vehicles and real estate investment trusts, particularly as they are illustrated with real world examples like the Bay Area Transit-Oriented Affordable Housing Fund, Avanath Capital Management and the Community Development Trust.| Permalink