NHPF-Authored Articles & Industry Reports

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

Perceptions of Affordable Housing Investment

81

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