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Turner Impact Capital Launches New Investment Platform to Address Workforce Housing Shortage

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LOS ANGELES, CA – To help address the growing shortage of affordable workforce rental housing across the United States, Turner Impact Capital (TIC) has launched the Turner Multifamily Impact Fund with plans to acquire and manage up to $1 billion in apartment communities in urban markets throughout the United States.

Beginning immediately, the Fund’s leadership team will identify and evaluate potential investment opportunities in densely-populated, ethnically diverse urban communities, with a focus on acquiring, improving and preserving critically-needed workforce housing for those earning up to 80% of area median income. Residents will include community serving professionals such as teachers, police officers, health care workers, service workers and others who earn too much to qualify for subsidized housing, but not enough to afford higher cost apartments or home ownership in the communities proximate to where they work.

The demand for quality, affordable workforce rental housing in the most populated areas of the country is expanding, but new development of affordable workforce apartments is limited due to the prohibitively high cost of land and construction. As a result, rents are reaching historic highs. Nearly half of all renters spend more than 30% of their income on rent and one quarter of all renters spend more than 50% of their income on rent. The growing disparity in workers’ income and their rent is untenable.

The Turner Multifamily Impact Fund will seek to address the housing affordability crisis by preserving the workforce-housing status of the properties it acquires and implementing targeted physical upgrades and property management improvements that enhance day-to-day operations and the quality of life for its residents. The TIC team will also implement select education, healthcare and security programs to benefit both property residents and their surrounding communities. These on-site programs may include afterschool tutoring, employment assistance, community health and well-being services and neighborhood watch programs.

“Workforce housing is an overlooked segment of the real estate market with a significant mismatch in supply and demand that we believe offers a compelling investment opportunity,” said Bobby Turner, Principal and CEO of Turner Impact Capital. “For nearly 20 years, we’ve proven that investing in ethnically diverse communities with a mismatch in supply and demand for local services can generate strong financial returns, while benefitting local communities and facilitating positive social impact.”

“We are also encouraged by the increased appetite for social impact investments from institutional investors who have recognized that achieving strong risk-adjusted financial returns and making societal change are not mutually exclusive. We look forward to making change – both financial and societal – by acquiring and improving well-positioned properties that will offer a broader range of housing options for renters.”

Investors in the fund include Citi Community Capital, the University of Michigan endowment and Rockefeller Brothers Fund.

“We are deeply committed to making a positive difference in communities around the country,” said Richard Gerwitz, co-head of Citi Community Capital. “Helping our partners preserve and enhance workforce housing in this manner, especially in urban areas where affordability has hit crisis levels, is one of the ways Citi is supporting innovative solutions to address our neighborhoods’ challenges.”

“Rockefeller Brothers Fund is pleased to play a key role in this high-impact opportunity, and to be aligned with a team whose experience in social impact investing is exceptional,” said Stephen Heintz, President of the Rockefeller Brothers Fund. “This new fund offers a valuable opportunity for us to invest with a purpose, creating a real, sustainable impact on an important social issue that affects urban areas across the United States, while also delivering a competitive market rate investment return.”

TIC has now surpassed $1.5 billion in investment potential to help address some of the country’s most pervasive social issues through real estate and infrastructure-related solutions, making it one of the nation’s largest social impact investment firms. In addition to the Turner Multifamily Impact Fund, Turner Impact Capital manages the Turner-Agassi Charter School Facilities Funds in partnership with Andre Agassi, to facilitate the development of best-in-class charter schools in underserved communities across the United States. To date, the Turner-Agassi fund has built 39 schools with 17,500 school seats and are developing an additional 20 schools with 14,000 school seats for the 2015 and 2016 school years.

The principals at TIC have overseen commercial real estate and mortgage asset portfolios totaling $12 billion and have launched several groundbreaking funds over the past two decades that helped define the social impact investment movement. In addition to the Turner Impact Capital initiatives, the team also created a series of urban funds focused on the development of community serving retail, housing and mixed use projects in densely populated ethnically diverse urban markets.

“With housing costs continuing to rise, there is a critical need for affordable rental options in densely populated areas across the entire country,” said Dan Millman, Principal and Chief Operating Officer of Turner Impact Capital. “Providing housing options close to employment centers, education and healthcare resources boosts quality of life for workforce families, but also extends to productivity, the environment and the well-being of the greater community. With more than four million new renter households coming online over the next ten years, we see this new fund as an opportunity to make change on a significant scale.”

“The Turner Multifamily Impact Fund offers a unique approach to real estate investment by increasing the availability of housing for a larger subset of the rental market,” said Gee Kim, Principal at Turner Impact Capital. “Our aim is to boost occupancy and reduce overall costs by implementing resident-focused services related to education, healthcare and security, and adopting environmentally sustainable practices that will improve lives and the broader community in a meaningful way.”

Mortgage Rates Return to 2015 High Point According to Bankrate.com Weekly National Survey

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NEW YORK, NY – Mortgage rates were on the rise, with the benchmark 30-year fixed mortgage rate returning to the 2015 peak of 4.03 percent, according to Bankrate.com’s weekly national survey. The 30-year fixed mortgage has an average of 0.26 discount and origination points.

The average 15-year fixed mortgage set a new 2015 high water mark of 3.26 percent, while the larger jumbo 30-year fixed mortgage inched lower to 4.06 percent. Adjustable rate mortgages were a mixed bag, with the 3-year ARM down to 3.17 percent, the 5-year ARM nosing higher to 3.18 percent, and the 10-year ARM unchanged at 3.70 percent.

Mortgage rates reversed course, moving higher as bond market volatility returned. Mortgage rates are closely related to yields on long-term government bonds, which fluctuate based on the outlook for the economy, interest rates, and inflation. Mortgage rates are now nearly one-quarter percentage point higher than they were just six weeks ago, when mortgage rates were at the lowest level in nearly two years. The monthly employment report is looming, and could prove to be the next catalyst for movement in mortgage rates.

Six weeks ago mortgage rates were at the lowest point in nearly two years when the average 30-year fixed mortgage rate was 3.79 percent. At that time, a $200,000 loan would have carried a monthly payment of $930.78. With the average rate now at 4.03 percent, the monthly payment for the same size loan would be $958.29, a difference of $27 per month for anyone that waited just a bit too long.     

SURVEY RESULTS

30-year fixed: 4.03% — up from 4.00% last week (avg. points: 0.26)

15-year fixed: 3.26% — up from 3.22% last week (avg. points: 0.17)

5/1 ARM: 3.18% — up from 3.17% last week (avg. points: 0.19)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets.

For a full analysis of this week’s move in mortgage rates, go to www.bankrate.com

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. There is no clear consensus this week, with 46 percent of the panelists forecasting that mortgage rates will rise further, and 36 percent predicting a pullback. Just 18 percent expect mortgage rates to remain more or less unchanged over the coming week.

Wells Fargo HomeLIFT Program to Help Virginia Beach, Norfolk Homebuyers

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(RECAP: Wells Fargo & Company, NeighborWorks America® and its network member Community Housing Partners today announced the $4.75 million Wells Fargo HomeLIFT℠ program for Virginia Beach and Norfolk homebuyers. Wells Fargo launched the new program to help boost homeownership and strengthen neighborhoods. Of the HomeLIFT program funds for the two Hampton Roads cities, $4.1 million will go toward down payment assistance grants and program support to help potential homebuyers overcome the barrier of making a sufficient down payment.)

PRG Real Estate Acquires 254-Unit Multifamily Community Located in Louisville, Kentucky

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LOUSIVILLE, KY – PRG Real Estate, a leading multifamily real estate investment and management firm, announced the acquisition of The Grove at Lyndon Apartment Homes, located in Louisville, Kentucky.

The Grove at Lyndon is a 254–unit garden-style apartment community located in the largest city in Kentucky, as well as the 28th most populous city in the United States.

The property, which is situated on 21 landscaped acres, is in the affluent Louisville town of Lyndon with easy access to local attractions such as Mall St. Matthews, Oxmoor Center Mall, restaurants and hotspots. The Grove at Lyndon features a charming wooded setting, open floor plans and private balconies. The property also boasts a resort-style swimming pool, picnic gazebo, two lighted tennis courts, a basketball court and a 24-hour fitness center.

PRG’s acquisition will undergo a major $2.1 million capital improvement plan which will transform both the interior and exterior of the property. At over $8,000 per unit, interior improvements include the addition of faux wood floors, adding a stainless steel appliance package and the installation of Washers and Dryers. Exterior improvements include a fresh paint job, renovations of the clubhouse and fitness center, the addition of a dog park and all new property signage.

PRG’s CEO Sam Foster stated, “We have experienced significant success in the Louisville market since 2007. We want to bring an enhanced level of quality and satisfaction to the residents at The Grove as we have at other PRG communities in Kentucky, including River Oak, just east of downtown. With hands-on management and extensive interior and exterior renovations, we are extremely excited to introduce a newly transformed community to both our residents and the neighborhood as a whole.”

CMBS Delinquency Rate Plunges According to Latest Trepp Market Research Report

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NEW YORK, NY – Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its May 2015 US CMBS Delinquency Report.

Following a cumulative decrease of only nine basis points from January to April 2015, the US CMBS Delinquency Rate dropped 17 basis points in May. The delinquency rate for US commercial real estate loans in CMBS is now 5.40%, down 87 basis points from the year-ago level. May marks the 22nd time the rate has fallen in the last 25 months, and is the rate’s largest decrease since November 2014.

May’s delinquency rate saw 23 basis points of upward pressure added thanks to $1.2 billion in newly delinquent loans. Helping push the rate down were almost $700 million in loans cured, as well as $1.2 billion in previously delinquent CMBS loans that paid off either at par or with a loss. These totals moved the delinquency rate down by 13 and 24 basis points, respectively, as the previously distressed assets behind them were removed from the numerator of the delinquency calculation.

“Conditions remain very favorable for the CMBS new issue market as spread volatility was incredibly low in May,” says Manus Clancy, Senior Managing Director at Trepp. “Distressed legacy loans continue to get flushed through the system, and every month we seem to see more trophy properties sell at record-level valuations.”

After an increase in April, the percentage of seriously delinquent loans, defined as 60+ days delinquent, in foreclosure, REO, or non-performing balloons, fell 21 basis points to 5.23% in May. If defeased loans were removed from Trepp’s delinquency calculation, the 30-day delinquency rate would be 5.69%, another decrease of 21 basis points from April to May.

Out of the five major property types, lodging’s delinquency rate had the steepest drop month-over-month with a decrease of 38 basis points to 3.80%. The industrial sector had the second-largest rate reduction in May, falling to 7.50% with a 33-basis-point decline. Though they are still the worst performing property sector, multifamily saw its delinquency rate drop 30 basis points to 8.62%.

For additional details, such as delinquency status and historical comparisons, request the May 2015 US CMBS Delinquency report at www.trepp.com/knowledge/research

TriBridge Residential and Coro Realty Acquire Luxury Apartment Community in Trendy Inman Park

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ATLANTA, GA – TriBridge Residential, an Atlanta-based multifamily investment and management company, and Coro Realty Advisors, an Atlanta-based retail owner and operator, announced that they acquired Inman Quarter, a new mixed-use development in Atlanta’s trendy Inman Park neighborhood.  The property includes 200-unit luxury apartments, approximately 39,000 square feet of Class A retail and 575-space parking deck.  

“Inman Park is the quintessential urban infill development in Atlanta,” said Steve Broome, managing partner of acquisitions at TriBridge. The mid-rise building, which was completed in January 2015, is located in the heart of Inman Park, only a half block from the popular Beltline trail and a few blocks from Krog Street Market. The luxury apartments feature top-of-the-market finishes, including quartz countertops, stainless steel appliances, and wood plank-style flooring.  Residents have access to a rooftop clubroom, a state of the art fitness center, a poolside billiards room, and an on-site event stylist with monthly socials.  The retail and restaurant space features upscale tenants including Ford Fry, MF Sushi, Bartaco, and Hampton & Hudson, among others.  In addition, the property includes a 315 space public parking deck that provides both valet and self-service parking.  TriBridge Residential will manage the apartments.  Coro will manage the retail.

“Between the vibrant neighborhood, Beltline access, and top dining options, Inman Quarter is one of the hottest locations for intown renters,” according to Andy Green, Vice President of Acquisitions at TriBridge.  Going further, Robert Fransen, Partner at Coro Realty, added, “The retailers at Inman Quarter will provide a unique mix of dining, boutique shopping, and neighborhood retail that targets Inman Park’s dynamic community.”

TriBridge sourced and secured the off-market deal in the summer of 2014 using internally sourced funds from long-term investors and TriBridge Equity Partners II, the company’s co-investment fund.  The acquisition builds on TriBridge’s recent strategy of trading older assets for newer properties intended for long-term hold.  In the past twelve months, the company has completed over $900 million in total transactions, including over $550 million in new acquisitions.  Based on the high-profile and significant retail component, TriBridge brought Coro Realty into the deal as a partner to ensure successful execution.  Inman Quarter represents Coro Realty’s sixth acquisition in the past twelve months.

MBA pushes to increase diversity in mortgage lending

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(RECAP: Citing the impending shift in the country’s demographics, the Mortgage Bankers Association is taking a leadership role in preparing the mortgage industry for the future. Bill Emerson, chairman-elect of the trade group, said the MBA wants to prepare the housing finance industry for the new normal of the future, which will be far different than the history of mortgage lending to this point. To that end, the MBA announced a partnership with the National Association of Hispanic Real Estate Professionals that will see the two organizations work together to advance NAHREP’s goal of advancing sustainable Hispanic homeownership and MBA’s goal of offering training and education to prospective and current mortgage professionals.)

Huge Energy Savings in VA Affordable Housing Apartments

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(RECAP: Basic steps for Virginia’s affordable housing will have a huge energy efficiency payoff, according to two new studies. The National Housing Trust and the Natural Resources Defense Council are part of a broad coalition looking at the issue. Michael Bodaken, executive director with the housing trust, says basic measures like compact florescent bulbs, low-flow faucets, double-pane windows, and better insulation would yield big results in existing affordable apartments; $21 billion in energy savings in eight states over the next twenty years. He says in Virginia the return is nearly three times the cost.)

$5.5 million in tax credits going to Blacksburg housing plan

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(RECAP: The Fieldstone proposal for affordable housing in Blacksburg won major federal support Friday with the announcement that it qualified for $5.5 million in tax credits. The apartment proposal on Givens Lane has been described as an important addition to the region’s housing mix because residents would be limited to households whose income is less than 60 percent of the region’s median. Sixty of the planned 144 units also would be reserved for people age 55 and older. Jim Chandler, director of the authority’s low-income housing tax credit program, said that facets of Fieldstone’s application that won points from reviewers included green-building techniques to increase energy efficiency so that tenants will have lower utility bills. Also, local support for the proposal helped because it reduced the project’s cost and amount of tax credits needed to cover it.)

Bluerock Residential Growth REIT Invests in 285-Unit Luxury Apartment Development Project in Atlanta

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ATLANTA, GA – Bluerock Residential Growth REIT announced its investment in a joint venture to develop a Class A, 285-unit apartment property in Atlanta, Georgia, to be known as the Cheshire Bridge Apartments. The luxury multifamily rental community will be set on 3.88 acres in a sought-after location adjacent to Atlanta’s Buckhead and Midtown neighborhoods. Total projected development costs are estimated at $48.2 million, or $169,000 per unit.

BRG’s underwriting projects a trended return on cost for the project of approximately 7.0% at stabilization, based on expected development cost and projected rental income. This compares very favorably to estimated market cap rates of 4.50% to 5.25% for comparable product. 

BRG made a preferred equity investment of approximately $15.5 million which, in conjunction with an investment by an affiliate of Bluerock Real Estate, LLC (“Bluerock”), comprises approximately 90% of the required equity for the development. The balance of the equity was contributed by Atlanta-based Catalyst Development Partners, the Company’s development partner on the project. Under an invest-to-own structure, BRG is entitled to a current-pay preferred return on investment of 15% per year with the right, once the project is developed and stabilized, to convert its investment into a majority common membership interest.

“We believe that the Cheshire Bridge development will be strongly accretive to the REIT for multiple reasons. First, the location is highly desirable and should, in our opinion, command top rents. Additionally, we know Catalyst Partners, with whom we have partnered in the past, to be expert at delivering high quality product at a very attractive cost basis,” said Ramin Kamfar, Chairman and CEO of BRG.

Cheshire Bridge will feature studio, one-, and two-bedroom unit layouts averaging 871 square feet. Located in a highly desirable area at the intersection of Cheshire Bridge Road and I-85, the development will offer immediate access to two of Atlanta’s largest employment nodes, Buckhead and Midtown, which encompass approximately 100,000 and 86,000 employees, respectively. Buckhead and Midtown are also home to a combined 22 million square feet of retail, and a university population of approximately 20,000 students with Georgia Tech and Emory University less than three miles away.

The community will be developed with best-in-class luxury lifestyle amenities including a resort style pool, fitness center, and business and media centers. Unit interiors will be condominium quality, featuring nine-foot ceilings, high-end stainless steel appliances, granite countertops, upgraded lighting, and garden bath tubs.