Perceptions of Affordable Housing Investment Presentation by Kingsley Associates
Primary Motivations for Investing: Common Themes
What are some of the unique bene fi ts of investing in the a ff ordable housing sector?
Good Return on Investment
50%
“People are looking for yield opportunities with downside protection because the capped or regulated rent properties will always be full. You don’t have the risk of vacancy or falling rent in a recessionary period of time. We think the income stream would be very durable and would be able to provide a very consistent return throughout economic cycles.”
ESG Mandate / Social Bene fi t
50%
Required as a Set Aside
42%
Stability of Renter Base
21%
Right Project at the Right Time
4%
10
5
Perceptions of A ff ordable Housing Investment 7
Perceptions of A ff ordable Housing Investment 12
What are the biggest challenges your clients face with investments in the a ff ordable housing sector? “There are increasing restrictions and government oversight. The government can change the rules at any time midway through the underwriting process. When this happens, it results in an inability to rely on the stability of the program in order to forecast valuations.” “Understanding the returns. There is a need to educate the investor base on how the returns work on these set aside deals. Recently we have seen more lenders and joint venture partners that better understand how to look at the returns to better evaluate value.”
How would you categorize the returns on a ff ordable housing investments?
Core Core Plus Core Minus / Less than Conventional Don’t Know Returns Vary Value Add
35%
27%
15%
12%
8%
4%
11
6
Perceptions of A ff ordable Housing Investment 8
Perceptions of A ff ordable Housing Investment 13
Challenges to Investing: Common Themes
What do you think should be done to generate more interest in a ff ordable housing investment?
Onerous Rules & Regulations Getting the Right Return Construction Costs Lack of Awareness of Proven ROI Finding Product / Inventory Public Pension Funds Eneligible for Tax Credit Ability to Grow Revenue
32%
29%
“Increased awareness is what is really needed. Today, a ff ordable housing is predominately considered a negative because it is seen as something that dilutes returns. I would stress the good that comes from a ff ordable housing investments, the bene fi ts for the city, and the bene fi ts outside of the ballot process. It just needs more positive press.”
19%
16%
13% 13%
10% 10% 10%
Rules & Regulations Vary by Locality Regulations Can Change Anytime
12
7
Perceptions of A ff ordable Housing Investment 9
Perceptions of A ff ordable Housing Investment 14
What are some of the unique bene fi ts of investing in the a ff ordable housing sector?
Generate More Interest: Common Themes
Education / Case Studies of Successful Projects
37%
“As a business venture, it’s a recession-proof element of our business. In fact, we have not started a conventional deal in the last three years, but we have a constant revenue stream from the development fees from the a ff ordable communities.”
Simplify Bureaucracy & Reporting
30%
More Clarity of Bene fi ts of Government programs
17%
17%
Create Tax Bene fi t for Public Pension Funds
13%
Conferences or Forums
13%
Increase Volume of Section 8 Vouchers
13
8
Perceptions of A ff ordable Housing Investment 10
Perceptions of A ff ordable Housing Investment 15
Key Takeaways
Unique Bene fi ts: Common Themes
• Lots of misconceptions • Need is greater than ever A ff ordable Housing De fi nition
ESG Ful fi llment / Social Bene fi t
62%
Stability of Renter Base
48%
Good Return on Investment
31%
Win-Win For ESG Goals and Returns • Variety of tools & incentives if you know where to look • Solid return on investment • Meet Environmental, Social, and Governance (ESG) goals
21%
Tax Bene fi t
17%
Diversi fi cation of Assets
14
9
Perceptions of A ff ordable Housing Investment 11
Perceptions of A ff ordable Housing Investment 16
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