San Francisco — (BUSINESS WIRE) — The nation’s affordable housing crisis, which has only grown worse amid the COVID-19 pandemic, is facing another critical threat that will persist even after vaccines are distributed and the economy fully reopens: Over the next several years, affordability restrictions on hundreds of thousands of federally assisted homes are set to expire, potentially reducing the affordable housing supply and exacerbating today’s critical affordable housing shortage.
To combat this coming wave of expirations, IMPACT Community Capital has launched a new investment strategy to provide short-term loans to borrowers seeking to preserve existing affordable multifamily properties. The strategy seeks to preserve approximately 5,000 affordable housing units and to provide investors access to stable income through risk-adjusted returns. To date, IMPACT has received investor commitments of $130M toward its $200M objective. These investors include leading institutions, such as Pacific Life Insurance Company, Farmers Insurance®, and Nuveen. IMPACT has already originated the first four loans which will result in the preservation over 480 affordable housing units.
“We are proud to take this definitive action to safeguard valuable existing affordable housing,” said Jeff Brenner, IMPACT’s President and Chief Executive Officer. “It will be impossible to get out in front of the crisis if we lose this critical supply of affordable homes to market rate development.”
“Few investments have as much positive impact — and broad impact — on a community than access to affordable housing,” said Violet Osterberg, Managing Director at Pacific Life. “Pacific Life is proud to do its part in preserving the critical supply of affordable housing that’s under threat.”
“Preserving quality affordable housing is more than just real estate. When addressed properly, institutional capital can increase quality of life and revitalize neighborhoods by supporting residents in accessing job training, better education, transportation, and affordable healthcare”, 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, affordability restrictions on more than 123,000 federally assisted units — including those developed through the Low-Income Housing Tax Credit (LIHTC) program, Section 8, and other government programs — are due to expire . By 2024, that figure is expected to grow to nearly 300,000 units . As affordability restrictions expire and owners potentially look to exit their ownership positions, these properties are at risk of conversion to market rate apartments.
“In a tight housing market like this, it’s hard enough for owners seeking to maintain affordable housing units to compete against market-rate buyers,” said IMPACT’s Chief Investment Officer Michael Lohmeier. “What IMPACT’s short-term loan strategy does is buy them time.” Indeed, IMPACT’s strategy is to invest primarily in short-term mortgage loans to developers and owners of affordable multifamily properties as they apply for permanent financing and government subsidy programs. Standard loan terms range from 6 to 18 months.
IMPACT’s strategy seeks to generate a stable source of income through short-term loans secured by first lien positions in affordable multifamily properties. IMPACT believes affordable housing is a critical part of a community’s essential infrastructure that positively affects a family’s health, wealth, safety, and dignity.
Founded in 1998 by leading insurance companies to generate institutional-quality, purpose-driven investments, IMPACT Community Capital is a pioneer in impact investing and was among the first to use securitization to deliver capital in scale for affordable housing. The firm has now originated $2 billion investments to provide affordable housing, healthcare, childcare and economic opportunities. IMPACT looks to guide new investors seeking to unleash the power of capital to transform communities without compromising investment quality. For more information visit impactcapital.net or contact Director, Investor Relations and Capital Markets, Melissa Radic.
 Public and Affordable Research Housing Corp. and National Low Income Housing Coalition tabulation of National Housing Preservation Database figures, retrieved January 2020
Disclaimer: This post is not an offering document for any securities. It is also not an offer of, or an agreement to provide, advisory services directly to any recipient. The information presented is intended to describe certain views of the author and Impact Community Capital LLC. The information presented in this post may contain statements of opinion, forward- looking statements and relies on certain assumptions. Any such opinions, forward-looking statements and assumptions may be inaccurate, and there can be no assurances that the examples included herein will reflect actual investment outcomes. Neither the author nor Impact Community Capital LLC intends or assumes any obligation to update or revise these opinions, forward-looking statements and assumptions in light of developments which differ from those anticipated. Past performance may not be indicative of future results and there can be no guarantee as to the return or volatility of any particular impact investment or set of impact investments. All investments carry a risk of loss that investors should be willing and able to bear. Use of this document is subject to the terms and conditions set forth on Impact Community Capital LLC’s website and can be accessed at http://impactcapital.net/about....