Housing Partnership Equity Trust Closes Third Deal In Six Months To Preserve Affordable Rental Housing for Low-Income Residents
Investment in Norfolk, VA Property Shows Continued Promise of Innovative REIT Model To Give Non-profit Developers Ready Access to Capital
(Washington, D.C., September 10, 2013) – The Housing Partnership Equity Trust (Equity Trust) today announced that it has purchased a 300-unit rental property in Norfolk, VA that serves primarily low-income families. The purchase of the Woodmere Trace apartments in the Norfolk/Hampton Roads area represents another example of how the Equity Trust is leveraging a pioneering, social enterprise model to keep rents affordable for people earning low-income wages who would have a hard time finding alternative housing. The Equity Trust was able to acquire the multifamily property—well located near community resources and job centers such as the Norfolk Naval Base and Joint Expeditionary Base Little Creek—by drawing on $100 million raised from institutional investors, foundations and non-profit members that include Citi, Prudential Financial, Inc., Morgan Stanley, the John D. and Catherine T. MacArthur Foundation, and the Ford Foundation.
The Housing Partnership Network (HPN) sponsors and operates the Equity Trust, which launched in December 2012. HPN, a business collective of 100 of the nation’s leading housing and community development non-profit organizations, combines social mission with private enterprise to address the need for affordable housing. This is the third transaction like this to close in recent months under the Equity Trust, a private, social-purpose real estate investment trust (REIT). Similar purchases have been made in Fairfield, CA and Aurora, IL in the past six months.
The Equity Trust acquired the property in collaboration with one of its 12 non-profit members, the Community Preservation and Development Corporation (CPDC), the largest non-profit developer of affordable housing in Washington, D.C. In recent years, CPDC has been steadily expanding outside of the DC metro market to widen access to affordable rental housing across the broader metropolitan area, including Hampton Roads, Richmond and Baltimore where there are significant shortages. CPDC will manage and operate the Norfolk complex of one- and two-bedroom units, and provide a variety of support services to residents, from nutrition counseling, to after school programs, to health care.
“The Norfolk transaction underscores how effective this business model is for preserving affordable housing,” said Drew Ades, President and CEO of the Equity Trust. “Through the REIT, our members are able to access capital that would not have been available to them otherwise, providing greater flexibility and speed to market. We’re thrilled to acquire this property in partnership with CPDC, which supports our collective mission of strengthening communities and keeping homes affordable for families.” “The residents of Woodmere Trace were vulnerable to sharp rent increases under new ownership. If we hadn’t come in, the residents could have seen their rents raised to a point where many would become rent burdened,” said J. Michael Pitchford, President and CEO of CPDC. “The Equity Trust is a real gamechanger for developers like us because we can now compete in a way that we weren’t able to before. We’re excited to join the Norfolk/Hampton Roads community and remain committed to keeping rents affordable and supporting the needs of residents.”
The Equity Trust fills a critical need for its non-profit members by providing access to long-term, lowcost capital to acquire apartment buildings quickly and efficiently within their communities, enabling them to compete more effectively with for-profit developers. These real estate transactions are unique because they do not involve the use of federal housing tax credits or other public subsidies, which nonprofits typically need to secure to finance the purchase of properties—a process that can stretch up to two years. Keeping these kinds of rental properties affordable is critical to individuals and families with lower incomes.
A recent study conducted by the Center for Housing Policy found that 26.4 percent of working renter households spent more than half of their income on housing costs in 2011. This is an increase from 2008. Additionally, Harvard University’s Joint Center for Housing Studies reported in 2011 that shrinking affordable housing stock, falling incomes, and increased competition from higher income renters has widened the gap between needed supply of affordable rental units and growing demand, especially over the last decade.
To increase the impact of the Equity Trust model, the Housing Partnership Network recently announced that it was raising an additional $500 million over the next two years to scale it up. The funds raised will be used to acquire, renovate and operate more than 7,000 affordable housing units around the country, and create 900 jobs.
“With the public sector tightening its purse strings, we need to step in to accelerate innovative models like this to preserve and increase the supply of affordable housing,” said Thomas Bledsoe, President and CEO of HPN. “We believe the Equity Trust offers a unique opportunity to enable high performing nonprofits to finance more affordable housing and unleash private capital in powerful ways to meet a social mission by keeping rents affordable for residents.”
The 12 non-profit members of the Equity Trust are: AHC Inc.; BRIDGE Housing Corporation; Chicanos Por La Causa, Inc.; Community Preservation and Development Corporation; Eden Housing, Inc.; Hispanic Housing Development Corporation; Homes for America, Inc.; LINC Housing Corporation; Mercy Housing; Nevada HAND, Inc.; The NHP Foundation; and NHT/Enterprise.
About Housing Partnership Equity Trust
The Housing Partnership Equity Trust (Equity Trust) was formed as a social-purpose real estate investment trust or REIT. It provides a ready source of long-term, low-cost capital, enabling its 12 mission-driven non-profit partners to quickly and efficiently acquire rental apartment buildings that provide quality homes for families, seniors and others with modest incomes. The Equity Trust launched in December 2012 with an initial investment of $100 million funded by investors, foundations and its non-profit members. The private, non-profit REIT is sponsored and operated by the Housing Partnership Network. To learn more, visit www.hpequitytrust.com.
About Community Preservation Development Corporation
A premier developer of affordable housing in Washington, D.C., Maryland and Virginia, Community Preservation and Development Corporation (CPDC) works to develop vibrant communities through innovation and partnership. The organization currently owns more than 4,000 dedicated affordable apartments within 26 communities, with resident engagement programs at many of its properties serving more than 9,000 residents. More about the company is available at www.cpdc.org.
About Housing Partnership Network
The Housing Partnership Network (HPN) is an award-winning business collaborative of the nation’s most successful affordable housing and community development non-profits. Creating private sector partnerships and enterprises that achieve ambitious social missions, HPN and its members work together to scale innovation and impact, helping millions of people gain access to affordable homes and thriving communities that offer economic opportunity and an enhanced quality of life. In 2013, HPN received the MacArthur Foundation Award for Creative and Effective Institutions, in recognition of its ongoing leadership and innovation in affordable housing. To learn more, visit www.housingpartnership.net.