The newly formed Housing Partnership Equity Trust (HPET), a real estate investment trust (REIT) focused on the affordable multifamily housing sector, has secured $100 million in funding in order to begin investing in multifamily properties nationwide.
The funds came from Citi, Morgan Stanley, Prudential Financial Inc., the John D. and Catherine T. MacArthur Foundation and the Ford Foundation. HPET will provide long-term, low-cost capital that will enable a group 12 nonprofit housing providers to acquire apartment buildings and provide housing for ‘families, seniors and others with modest incomes,’ the organization says.
In its first transaction, HPET funds are enabling Mercy Housing Lakefront to acquire and rehabilitate a 128-unit property in Aurora, Ill., preserving affordable housing without dependence on Low-Income Housing Tax Credits or other public subsidies.
‘The Housing Partnership Equity Trust demonstrates a new approach to funding affordable housing – one that will streamline the capital-raising process for acquiring affordable housing units and sharply reduce transaction costs, as well as the time it takes to close on a transaction,’ says HPET CEO Drew Ades. ‘Over the next several months, we will raise additional funds to further expand our scale and impact.’
‘Since properties acquired through HPET generally will not rely on property-level subsidies, the nonprofit operator has the ability to build cash and liquidity through efficient operations, better aligning incentives and allowing nonprofits to increase their capacity, and provide an alternative investment channel to social-impact investors,’ says Andrew Ditton, co-head of Citi Community Capital.
The 12 nonprofit members of HPET are AHC Housing Inc.; BRIDGE Housing Corp.; Chicanos Por La Causa; Community Preservation and Development Corp.; Eden Housing Inc.; Hispanic Housing Development Corp.; Homes for America Inc.; LINC Housing Corp.; Mercy Housing; Nevada HAND Inc.; NHP Foundation; and NHT/Enterprise.