The National Affordable Housing Trust (NAHT) has launched a unique low-income housing tax credit (LIHTC) fund that brings together deals from the top mission-driven, nonprofit developers in the nation.
“They’re the strongest of the strongest,” says Lori Little, NAHT president and CEO. “They do what they say they’re going to do, and their product consistently performs above AHIC (Affordable Housing Investors Council) standards.”
LIHTC funds raise equity for affordable housing developments and often feature a mix of projects from a diverse group of for-profit and nonprofit developers. NAHT’s new fund is different because all of the projects will be by members of Stewards of Affordable Housing for the Future (SAHF), a collaborative of 13 premier nonprofit affordable housing providers. Together, the members own more than 138,000 affordable rental homes.
About 10 of the organization’s members, including BRIDGE Housing, CommonBond Communities, The Community Builders (TCB), The Evangelical Lutheran Good Samaritan Society, Mercy Housing, National Church Residences, The NHP Foundation, Preservation of Affordable Housing, Retirement Housing Foundation, and Volunteers of America, are expected to take part in the SAHF Affordable Communities Fund.
"You have to start by thinking about what SAHF is. It's an important coming together of some of the oldest, largest, and highly mission-focused nonprofits in the country. There are 13 of us. We're not a huge group, but there's a depth of experience, productivity, geographic reach, and variation of types of projects. It's a real place where people come together and innovate together. You take that, and I think it can be relevant to the business of raising tax credit equity," says Bev Bates, senior vice president of development at TCB. "We're rolling out a fund that we think offers the investor community a unique opportunity that has at its core ingredient some of the most sophisticated nonprofits in the country with strong track records and strong balance sheets."
It’s the first time that these developers have come together and through NAHT will present $100 million of mission-oriented projects to the market.
“This has been a focus from the developers, saying we think this is going to spotlight the quality of work we do across our membership,” says Little, who calls the initial fund “the first iteration.”
She hopes NAHT will build on the collaboration and go to the market with additional funds in the future, including ones that will have a key focus, such as senior housing or affordable housing with a strong health-care component.
The participants think the fund will appeal to investors who want to deploy their capital in a significant way with well-established developers.
NAHT is a longtime housing credit syndicator and development advisory organization. Roughly 97% of its portfolio is made up of developments from strong nonprofits, including SAHF members, says Paul Cummings, senior vice president, director of originations and capital markets at NAHT.
Overall, LIHTC developments have a strong track record, including a foreclosure rate of less than 1%. NAHT’s portfolio has consistently performed above industry standards, with higher occupancy rates and stronger debt-service coverage ratios, according to company officials.
“We think for an investor this is a great place to say I want my money to have a significant impact and really work in a meaningful way in the marketplace,” Little says.
NAHT has started raising capital and hopes to close the fund by midyear.