At a time when the nation is facing an affordability crisis, a growing number of financing vehicles are balancing profit and social good to help owners and developers acquire and preserve needed housing, according to a new report by the ULI Terwilliger Center for Housing and NeighborWorks America.
The Preserving Multifamily Workforce and Affordable Housing: New Approaches for Investing in a Vital National Asset report looks at 16 leading efforts across the nation. So far, collectively they have raised more than $2 billion and helped to acquire, rehab, and develop almost 60,000 units of affordable and workforce housing.
In addition, these vehicles are delivering significant cash-on-cash returns—from 6% to 12%—to their equity investors, which is above and beyond returns from other social investment areas, says report author Stockton Williams, executive director of the ULI Terwilliger Center for Housing.
“One of the reasons we thought it was timely to do the report was the fact that there are now a significant and growing number of these investment vehicles that are focused on preserving affordable and workforce housing. We have heard consistently from many that they believe there is a lot of untapped potential in the conventional affordable housing capital markets and in some of the nontraditional markets,” says Williams. “Hopefully this report not only serves as a resource for developers and owners who are actively working to acquire and preserve affordable and workforce housing but acts as a guide for socially motivated institutions that are looking to invest capital in activities with a social and financial return.”
Four innovative efforts that are emerging and featured in the report are the Develop Michigan Initiative, the Greater Minnesota Housing Fund Workforce Housing 2.0 Pilot, the Healthy Neighborhoods Equity Fund, and the Seattle Futures Fund.