Last week’s announcement that Los Angeles-based TruAmerica and Toronto-based Manulife Investment Management were forming a $1 billion affordable housing joint venture that will be named Anchor Point Residential didn’t come together overnight.
TruAmerica Co-Chief Investment Officer and Head of Capital Markets Noah Hochman said that CEO Bob Hart was presented with the opportunity more than two years ago.
“Creating an affordable housing platform has always been on the roadmap of TruAmerica’s growth plan,” Hochman told Multifamily Dive in emailed comments.
Assembling a 51-property affordable housing portfolio takes time, as deals are deeply negotiated across a series of stakeholders.
“Over the past 18 to 24 months, the TruAmerica and Manulife IM teams received approvals to assume hundreds of in-place LP agreements, regulatory agreements, existing loans and approval from many states, counties and cities,” Hochman said.
Hochman said affordable housing provides stable operations for apartment owners while serving a critical social need.
“Affordable housing is supported by strong, resilient demand that is less sensitive to economic cycles, with occupancy levels that typically outperform the broader rental market,” Hochman said. “In addition, regulatory frameworks like the Low-Income Housing Tax Credit program and long-term affordability covenants create predictability and reduce resident turnover.”
Complementary business
While affordable housing represents a strong stand-alone business, it also complements TruAmerica’s existing workforce housing platform, which focuses on attainable homes for middle- and lower-income renters.
By expanding into affordable housing, Hochman said TruAmerica can leverage its institutional asset management platform, third-party compliance oversight and longstanding relationships with local stakeholders to preserve housing stock, extend the useful life of properties and keep rents affordable.
“TruAmerica’s experience operating at scale in workforce housing has given us deep expertise in resident services, property operations, and community-building, which translates directly to affordable housing,” Hochman said.
TruAmerica isn’t the only firm that sees an opportunity in affordable housing. New York City-based Blackstone, the largest private equity apartment owner, has April Housing among its portfolio companies. April is the No. 1 owner and expected preserver of affordable Low-Income Housing Tax Credit housing in the U.S.
In general, rental housing economist Jay Parsons said it's encouraging to see more capital sources become interested in housing that’s either workforce or affordable.
“There's a real need, and there's demand in the market for that type of product,” Parsons told Multifamily Dive. “At the same time, I think there's much more interest among capital to serve that need.”
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