Reit Magazine - March/April 2021 - 28

Christopher Ptomey, executive director of the
Terwilliger Center for Housing at the Urban Land
Institute, says there's a disconnect in the housing
market between the higher end of the market and the
low end.
" The problem is there's no moderate-income housing for people to move up from lower-cost housing,
or to move down from an expensive apartment
if their circumstances change. REITs can provide
investment into that middle level of housing, "
Ptomey says.
While many people associate affordable housing
with low-income households, financial experts
generally define " affordable " as a home that costs less
than 30% of household income.

" The most common role for REITs to play in creating more affordable housing options is by purchasing
and upgrading older multifamily buildings, " says
Merrill Ross, managing director and senior research
analyst for REITs with Compass Point Research
and Trading. She says this strategy, which benefits
investors looking for reliable growth, works best in
markets with good job growth for middle-income
jobs, such as Texas, Florida, and South Carolina.

AFFORDABLE OPTIONS
Mark Decker, Jr., president and CEO of Centerspace
Homes (formerly IRET) (NYSE: CSR), says his
company's strategy shifted about three years ago
from several property sectors to just one: multifamily

SOCIAL IMPACT AND SOLID RETURNS
The pandemic has undoubtedly had an outsize
impact on low-to-moderate income tenants,
which includes essential workers such as home
health aides, grocery store employees, delivery
drivers, as well as those in the hospitality and
retail industries, says Anne McCulloch, CEO of
Housing Partnership Equity Trust (HPET),
which invests in apartments affordable to
households with incomes between 50% and
80% of area median income.
" We run our apartments on very thin
margins, so we manage them carefully and
have significant operating reserves set aside
because we know our residents are more
vulnerable than those with higher incomes, "
McCulloch says.
HPET was created by nonprofit housing

28 |

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providers who realized it was a gamechanger
to tap into private capital, McCulloch explains.
" The government can't be enough to solve the
need for workforce housing, " she says. " We
acquire properties with our nonprofit partners, who are some of the largest regional and
national nonprofits and are deeply connected
to the communities where they operate. "
The deals are conservative, typically with a
20% down payment and 80% financed with
a Freddie Mac or Fannie Mae loan to HPET,
according to McCulloch.
" With our nonprofit partners we can take
advantage of state and local tax abatements
and subsidies for affordable housing to reduce
our operating costs and to be competitive for
properties, " she says.



Reit Magazine - March/April 2021

Table of Contents for the Digital Edition of Reit Magazine - March/April 2021

Contents
Reit Magazine - March/April 2021 - Cover1
Reit Magazine - March/April 2021 - Contents
Reit Magazine - March/April 2021 - 1
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