NORTH AMERICA – Global real estate investment manager Cornerstone Real Estate Advisers has closed a fund with $116m (€86m) in equity commitments, targeting the substantial gap between supply and demand in the affordable housing market in the US.
Co-sponsored by the National Affordable Housing Trust, the Cornerstone-NAHT Enhanced Preservation Fund III will finance the rehabilitation of 17 apartment properties across the country.
Don Phelan, vice-president in Cornerstone's Affordable Housing Group, said the timing for the fund was right.
"Demand for affordable housing has always been strong and clearly increased since the downturn," he said.
The 17 properties, benefiting from federal rental assistance, cater predominately to low-income seniors and have a history of extremely low vacancy rates.
Among the group of assets is Torringford West in Connecticut, a 79-unit complex with a 100% occupancy level and a three-year waiting list.
"Demand for safe and secure affordable housing by our country's ageing population is particularly strong," Phelan added.
According to a study by the National Low Income Housing Coalition, 31% of all elderly households fall into a group categorised as extremely low income – those with household incomes at or below 30% of the area median income.
"Rehabilitations, as opposed to new construction, are usually an efficient means of leveraging finite federal resources and can be a major help in preserving neighbourhood stability," Phelan said.
Fund III, whose investors were mostly major financial services companies, marks the third affordable housing fund initiated by Cornerstone and non-profit financial intermediary NAHT.
Combined, the three investment vehicles have yielded an aggregate $240m for the preservation of affordable housing residences at 36 apartment communities encompassing 3,615 units.