In hot real estate markets where displacement is the order of the day, it takes serious commitment and creative strategizing to keep affordable housing affordable for the long run.
Last year, LISC played a critical role in helping one of its longtime nonprofit partners, St. Nicks Alliance, purchase 248 units of privately-owned affordable housing in the popular Greenpoint neighborhood of Brooklyn—homes that might otherwise be lost to the market.
A private, Brooklyn-based real estate company, MHR Management, owned the units, which are spread throughout a cluster of buildings. The founder and president of MHR, who was on the cusp of retirement in February 2017, was able to sell her portfolio to St. Nicks Alliance, as part of joint venture. The acquisition of the portfolio by a nonprofit group, which secures its ongoing affordability, was made possible, in part, by a $5.3 million loan from LISC NYC.
But what made this transaction especially unusual was the involvement of a trailblazing collective of New York City community developers known as the Joint Operating Entity, or JOE NYC. The organizations in the JOE are pooling their portfolios in order to safeguard affordable units and conserve resources in an expensive and precarious real estate market.
The JOE NYC was designed to strengthen the asset and property management capacity of its members, like St. Nicks, who are nonprofit community development corporations, and of the industry as a whole. It also aims to bolster the cash flow and balance sheets of participating CDCs and enhance their ability to secure financing for projects. And it helps ensure the long-term affordability of their properties and the stability of the communities where they are located.
The JOE NYC brought a $1.2 million equity investment, also sourced by a LISC fund, to the St. Nicks transaction. In the current real estate market, the purchase of those 248 units was a rare example of the transfer of ownership from a for-profit developer to a nonprofit organization.
LISC was uniquely suited to guiding the seller and the St. Nicks/JOE NYC partnership through the technical complexities of the transaction. In addition to sourcing the loan and equity, LISC and its affiliate, National Equity Fund, worked with St. Nicks and JOE NYC to weigh financing options and how to structure the transfer and shepherded the buyers through the process.
“There were a lot of players who had to align around the value of long term affordability,” said Sam Marks, executive director of LISC NYC, “from MHR, to the city, to the new nonprofit owners. In today’s supercharged real estate market, we need to bring as many housing assets as we can into long-term affordable stewardship, and JOE NYC and its members like St. Nicks are critical players in making this happen.”
Photo credit: Meerkat Media Collective
Private Sector Support
Public Sector Support
Executive Director: Sam Marks
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