Our country is experiencing an affordable rental housing crisis that cannot be solved by only building new affordable housing. Preserving affordable rental homes is also essential because it prevents resident displacement, costs less than building new affordable homes, and sustains homes that are already integrated into the local community. For instance, rehabilitating an existing affordable apartment can cost one-third to one-half less than building new comparable affordable homes. Without preserving existing affordable rental housing, we fall two steps back for every step we take forward.
Preserving affordable rental homes ensures properties continue to remain affordable to people with low or extremely low incomes. Often, preservation involves the purchase of a property that either i.) has expiring income or rent restrictions or ii.) has affordable unrestricted rents but significant repair needs by a new owner who is committed to the long-term affordability of the property. Preservation transactions are usually combined with repairs to improve the property for long-term viability and occupancy.
One strategy to finance the preservation of affordable rental homes is through partnerships with mission-driven real estate investment trusts (REITs), such as the Housing Partnership Equity Trust (HPET). HPET was created through a collaboration of mission-driven nonprofits in order to provide a ready source of long-term, low-cost capital that can be used to quickly and efficiently acquire apartment buildings that provide quality homes for families, seniors and others with modest incomes. Below, SAHF has profiled two transactions in which its members partnered with HPET in order to acquire apartment buildings and keep rents affordable. As the profiles show, the financing that HPET provides serves as a critical source of capital that allows mission-driven owners to acquire properties faster and cheaper, providing an opportunity to leverage more public and private resources and allowing them to recyle the savings into repairs, energy efficiency upgrades, and resident services.
Profile 1: The Bradford - Hagerstown, MD - National Housing Trust, Homes for America, and Housing Partnership Equity Trust
Profile 2: 2000 Illinois Apartments - Aurora, IL - Mercy Housing and Housing Partnership Equity Trust