Interesting Approach for Affordable Housing

According to this piece in the Wall Street Journal some non-profit affordable housing providers have formed a REIT to help acquire properties:

An apartment complex in suburban Chicago was saved from the clutches of gentrification by a private real-estate investment trust formed to buy and protect affordable housing…

Housing Partnership has raised over $100 million from investors, includingCitigroup Inc., C +0.80% Morgan Stanley MS +2.02% and Prudential Financial Inc., PRU +2.85% as well as the John D. and Catherine T. MacArthur Foundation. The money will be chasing additional acquisitions in the future, says Drew Ades, Housing Partnership’s chief executive…

To compete with the profit-making companies for properties, the housing advocates are combining the benefits of their nonprofit structure with the financial flexibility that comes from operating a REIT.

“We were only able to get this property because of this REIT structure,” says Ms. Holler, noting that Mercy closed on the property in three months instead of the two years it would typically take to raise financing strictly through the nonprofit channels. Yet, Mercy’s nonprofit status came in handy given it was able to use state tax credits to secure the property at a below-market rate.