IMPACT Community Capital Announces New Strategy Designed to Address Looming Affordable Housing Preservation Crisis
SAN FRANCISCO – (BUSINESS WIRE) – The affordable housing crisis in the country, which has only worsened amid the COVID-19 pandemic, faces another critical threat that will persist even after the distribution of vaccines and the full reopening of the economy: Over the next few years, accessibility restrictions on hundreds of thousands of federally-subsidized homes are set to expire, potentially reducing the supply of affordable housing and exacerbating the severe shortage current affordable housing.
To combat this next wave of expiration, IMPACT Community Capital has launched a new investment strategy to provide short-term loans to borrowers looking to preserve existing affordable multi-family properties. The strategy aims to preserve approximately 5,000 affordable housing units and provide investors with access to stable income through risk-adjusted returns. To date, IMPACT has received investor commitments of $ 130 million to meet its goal of $ 200 million. These investors include leading institutions, such as Pacific Life Insurance Company, Farmers Insurance® and Nuveen. IMPACT has already granted the first four loans which will allow the preservation of more than 480 affordable housing units.
“We are proud to take this definitive step to protect existing affordable housing of value,” said Jeff Brenner, President and CEO of IMPACT. “It will be impossible to emerge from the crisis if we lose this essential supply of affordable housing to the benefit of developing market rates.”
“Few investments have a positive impact – and an impact as wide – on a community as access to affordable housing,” said Violet Osterberg, CEO of Pacific Life. “Pacific Life is proud to contribute to the preservation of the critical supply of affordable housing under threat.”
“Preserving quality affordable housing is much more than real estate. When handled properly, institutional capital can improve the quality of life and revitalize neighborhoods by helping residents access skills training, better education, transport and affordable health care, ”said Pamela West, Managing Director – Real Estate Impact Investing at Nuveen. “Nuveen is proud to partner with IMPACT Community Capital to help transform communities.”
In 2021 alone, accessibility restrictions to more than 123,000 federally funded units – including those developed under the Low Income Housing Tax Credit (LIHTC) program, section 8, and others government programs – should expire.1. By 2024, this figure is expected to reach nearly 300,000 units2. As accessibility restrictions expire and owners potentially seek to vacate their ownership position, these properties risk being converted to apartments at market rates.
“In a tight housing market like this, it’s hard enough for homeowners looking to maintain affordable housing to compete with market-rate buyers,” said Michael Lohmeier, IMPACT’s chief investment officer. “IMPACT’s short-term lending strategy saves them time.” Indeed, IMPACT’s strategy is to invest primarily in short-term mortgages to developers and owners of affordable multi-family buildings when they seek permanent financing programs and government grants. Standard loan terms range from 6 to 18 months.
IMPACT’s strategy aims to generate a stable source of income through short-term loans secured by senior positions in affordable multi-family properties. IMPACT believes that affordable housing is an essential part of a community’s critical infrastructure that positively influences the health, wealth, security and dignity of a family.
Founded in 1998 by leading insurance companies to generate institutional quality and targeted investments, IMPACT Community Capital is a pioneer in impact investing and was among the first to use securitization to provide capital to large scale for affordable housing. The company has now launched investments of $ 2 billion to provide affordable housing, health care, child care and economic opportunities. IMPACT seeks to guide new investors who seek to unleash the power of capital to transform communities without compromising the quality of investments. For more information visit impactcapital.net or contact Melissa Radic, Director of Investor Relations and Capital Markets.
1 Public and Affordable Research Housing Corp. and the National Low Income Housing Coalition tabulation of National Housing Preservation Database, retrieved January 2020