Enterprise Launches $144M One-Stop Shop Affordable Housing Fund
- Dec 12, 2013
Enterprise Community Investment Inc. just made investing in affordable housing development simpler with the introduction of the Enterprise Housing Partners 24 Fund. The $143.9 million fund is structured to allow for flexible pricing and market options through a single vehicle.
Enterprise 24 Fund attracted a bevy of banks that were able to benefit from the streamlined investment process. Pricing differs by product and location across the country and the new fund allows for tiers of pricing based on location for investors who are interested in regional markets in the Pacific Northwest, California and Chicago areas, or prefer to invest nationally, excluding the aforementioned regions.
It is an idea that Enterprise President & CEO Charlie Werhane suggested after the organization saw that the investment process presented challenges for some investors. Traditionally, Enterprise offers a national fund and one or two regional funds annually, but since investors could only be a certain percentage of the fund, their investments were limited in smaller regional funds. Multi-regional pricing with a single limited partnership agreement was the answer.
It’s all about location, particularly since a great deal of bank investment is driven by the Community Reinvestment Act, which, as summarized by the Federal Reserve, serves to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.
“Because investors understood that where they need product the pricing is driven by the demand, they were willing to pay different prices in different markets, so what we did was put together a fund that would be a one-stop shop for them; they could get product in several different markets but have it priced according to the demand in those markets,” Kari Downes, vice president, Capital Markets, with Enterprise, told Commercial Property Executive.
Not only did Enterprise 24 eliminate some of the complications for banks, it provided additional opportunity. “Some of the same investors who would have invested with us nationally also invested in our regional fund for, say, California or the Pacific Northwest, so they were able to close into one fund and get what they would have otherwise gotten in closing in two funds,” Amy Dickerson, a senior director with Enterprise, added.
Through Enterprise 24 Fund, 22 projects encompassing 2,641 apartment residences in six states will be financed. Deals for 13 have already closed, including the 51-unit Ballard Apartments in Seattle. Ballard Apartments, developed by the Low Income Housing Institute, is designated for very low-income and formerly homeless seniors.
“[Through affordable housing funds] there’s a large number of units that are done each year that provide affordable housing and are reaching the lowest income households,” Downes said. “At Enterprise, we really have a focus on the lowest income families; a large percentage of our units are retained for 30-40 percent AMI households.”
And it’s not just any housing that Enterprise provides. The organization is keen on sustainability and goes the extra mile to ensure that the apartment properties are green. “Overall it’s a very thoughtful program,” Dickerson concluded.