Across the country, as the demand for rental housing increases, the amount of money available for the preservation of affordable housing is shrinking. Real estate developers are buying up unsubsidized affordable housing with the aim of taking it out of the affordable stock and increasing the rents. In the process, low-income families who live there are being displaced. HPN, a Boston-based business collaborative of 100 of the nation’s premier housing and community development nonprofits, is helping preserve housing for low-income people by giving nonprofit affordable housing developers a chance to compete for the purchase of properties using a financing model long employed in the private sector.
To help preserve and improve affordable housing stock around the country, HPN has joined with 12 of its members, major foundations, and financial institutions to create the first-ever real estate investment trust (REIT) owned and operated by nonprofits. Known as the Housing Partnership EquityTrust, the REIT is a solution to a longtime problem—the struggle among nonprofit housing organizations to access financing quickly to bid competitively against their for-profit counterparts on the purchase of unsubsidized properties. The REIT provides acquisition funds that members can use to close on real estate purchases within 90 days, compared to the more typical time frame of one to two years.
“Our members are real estate developers with a mission to transform lives and communities, using housing as a stepping stone,” says Thomas Bledsoe, president and CEO of HPN, which was founded in 1990 by a group of affordable housing and community development leaders to build better futures and vibrant communities for low-income people.
So far, the REIT has closed three properties—in Illinois, California, and Virginia. Says Bledsoe, “In each case, the developer couldn’t have purchased the building without the REIT because they wouldn’t have been able to close within 90 days.”
Leveling the real estate playing field for even more nonprofit developers, HPN will implement its NEXT Award to expand from a $100-million REIT to a $500-million REIT in the next two years, helping its nonprofit members quickly access financing needed to expand affordable housing projects across the U.S. In doing so, it will preserve and rehabilitate 7,000 units of affordable housing and provide quality housing for those who need it most.