1. Funding of Naturally Occurring Affordable Housing
Panelists:
Corey Aber, Freddie Mac
Rachel Robinson, Greater Minnesota Housing Fund
Thomas Stanberry; CommonBond
Moderator:
Chip Halbach, Minnesota Housing Partnership

2. Sold Out
An MHP analysis of apartment property sales in the Twin Cities region
Chip Halbach

3. 2010 - 2015 Apartment Property Sales
Report focuses on:
1,300 apartment property sales
62,000 units sold
Buildings with 4 or more units
95 percent built before 1995

4. Sales of apartment properties are accelerating
From , roughly 19,990 units of multifamily rental housing were sold — 147 percent higher than the number of units sold in Key takeaway: Rapid increase in sales speaks to investor incentive to upscale properties and the growing opportunity for displacement across the region.

5. Sales prices have increased dramatically
Between 2010 and 2015, the average unit price in apartment properties sold increased by 54 percent, reaching $86,430 in 2015. Key takeaway: Tight rental market is driving up per-unit price, making it difficult for new property owners to maintain affordable rents.

6. Affluent rental households are driving the market
Much of the overall population growth was among renter households, including a dramatic increase in renters earning $50,000 or more per year.
Key takeaway: Moderate income renters are not served by luxury developments and new development is not financially feasible — so investors are acquiring and upscaling older rental properties.

7. Conclusion

8. Rachel Robinson, NOAH Fund Manager
NOAH Impact Fund
To Preserve Naturally Occurring Affordable Housing in the Twin Cities Metropolitan Area
Rachel Robinson, NOAH Fund Manager
April 20, 2017

10. Targeted Investment Opportunity Areas
- Affordability at-risk – rising rents, low vacancies
High rate of multifamily rental property speculation/sales
Major redevelopment or planned infrastructure – early indicator
Increase in construction permits – early indicator
Increasing property values – early indicator
“Opportunity Area”: Proximity to education, services, employment, and public transportation

11. Regional Impact at Scale
Acquisition of 1,000+ units within 2 ½ years
Prevents displacement of over 3,000 low-income residents
Significant intervention to loss of affordable rents
Loss prevention counteracts tight vacancies on affordable units
Innovative capital stack engages public agencies to greater leverage than direct public financing
Fund does not compete with limited gap funding for new production

12. NOAH Impact Fund Equity
NOAH Property Level Financing
70% of project costs will be funded by a first mortgage
30% of project costs will be funded by equity
Equity source is 90% from Fund and 10% from Operating Partner
Each property acquired with a qualified non-profit or for-profit
Property Cash Flow Waterfall
After mortgage payments all remaining cash flow will flow
90% to the NOAH Impact Fund
10% to the Operating Partner
Refinancing to Repay NOAH Investors
Operating Partner refinances property at 10 year point
Refinancing proceeds repay outstanding debt and remaining equity capital
Project Financing Model
Uses of Funds:
$ 9,000,000 Purchase Price
$ 1,000,000 in Costs and Repairs
$10,000,000 Total Development Cost
Sources of Funds:
$ 7,000,000 First Mortgage
$ 2,700,000 NOAH Impact Fund
$ ,000 Operating Partner Capital
$10,000,000 Total Sources of Funds

13. Best Practices in NOAH Must close on acquisitions within 60 days
Modest capital improvements upfront & ongoing repairs
Green and energy related improvements = lower operating costs
Low acquisition fee, nominal developer fees only
Lower cost capital = lower, more affordable rents for tenants
Robust asset management is key to a successful portfolio
Long-term asset building mechanism for owner-operator
Key: Acquire in opportunity areas near transportation, jobs, quality schools increases quality of life and outcomes