A group of nonprofit developers is testing a new way to boost their ability to manage and safeguard affordable housing: by pooling portfolios and talent, they hope to operate more cost-effectively and compete with private developers. LISC has supported the Joint Ownership Entity, or JOE, since its inception, and has just helped the path-breaking group acquire a $5 million portfolio from a private owner.
This excerpt below is from:
Nonprofits form REIT-like group in bid to become affordable housing players
By Joe Anuta, Crain's New York Business
Nonprofit developers say they are the best stewards of the city's affordable housing stock, but because they are so far down the real estate food chain, they can't compete with their for-profit counterparts to buy or build more of it. A new organization is looking to change that equation by creating an ownership pool of thousands of units in a bid to become one of the biggest players in the industry within five years.
The Joint Ownership Entity, known as JOE NYC, plans to launch officially this spring, and borrow a concept from real estate investment trusts by taking ownership of 3,000 affordable apartments across roughly 50 developments. In exchange, each of the contributing organizations will get a seat on the board and payouts from the collective kitty based on the value of the property they've ceded. If all goes according to plan, the properties will be managed more efficiently, allowing the stipends paid to the groups to be more than what they could have made on their own.
"JOE NYC's benefits come from scale," said Peter Madden, executive director of the ownership entity. "What groups are really getting is our ability to manage the assets of this citywide portfolio."
That management might include refinancing mortgages or investing in green upgrades in ways that individual organizations cannot typically afford.
Ideally, the conglomerate will amass enough financial heft to back individual firms that need loans to purchase portfolios or land, or even compete for city and state affordable housing deals.