‘This is a really big deal’ for Lone Star State’s Capital City
CDT helped acquire a new Texas apartment complex that aligns with Austin local government leaders’ vision to integrate affordable workforce housing around market-rate properties throughout the state’s Capital City, an effort that’s earning national recognition for innovation.
The property, Preserve at Wells Branch, is a 308-unit, currently market-rate property located in Austin. CDT and its partners announced Sept. 27 their plans to place long-term restrictions on the property such that 50 percent of the units will serve residents at or below 80 percent Area Median Income (AMI).
CDT’s partners on the deal are the Austin Affordable Housing Corporation (AAHC), a non-profit affiliate of the Housing Authority of the City of Austin, and the Austin Housing Conservancy (AHC), which manages a newly created fund to preserve affordable housing throughout Austin.
“Our acquisition of Preserve at Wells Branch is our second equity investment with AAHC,” said CDT Chief Investment Officer Brian Dowling.
“Following our acquisition of Preserve at Wells Branch, CDT and AAHC jointly own 950 units in Austin. Through our joint ventures, we have placed long-term restrictions on these properties so that long-term affordability, where none previously existed, was created for 475 families,” Dowling said.
The 2018 investment is CDT’s first with AHC and is also the initial investment for AHC’s fund.
“We’re excited about playing a role in helping AHC get off the ground with this transaction and we look forward to seeing their fund continue to create and preserve deeply needed affordable housing in Austin,” Dowling added.
CDT invested $8.6 million of equity into the joint venture, which funds acquisition and more than $8,000 per-unit of rehab and initial capital reserves. The deal will help ensure that the properties are preserved as high quality affordable housing for years to come. In conjunction with the Wells Branch acquisition, CDT and its partners placed new 12-year Fannie Mae debt, originated by Bellwether Enterprise, on the property.
Representatives for CDT’s partners said they bought the property to help preserve available living spaces for workforce families and individuals, according to the AHC press release.
“If we really want to be serious about affordability, preservation really has to be a key part of it,” said David Steinwedell, the CEO of Affordable Central Texas.
The apartments will be available to folks who make between 60 and 120 percent of the median family income, which is between $51,000 and $103,000 dollars for a household of four.
According to the Housing Authority of the City of Austin, current tenants won’t be displaced and the property will be improved to their “high standards of operation.”
“So many low-income people in our community are struggling with housing needs and with greater affordability,” said Steinwedell.
According to Steinwedell, the property near Interstate 35 and Wells Branch Parkway is ideally located as it’s close to jobs, schools and transportation.
“It checks off all the priorities we have for properties that we’re looking to acquire,” said Steinwedell.
Right now, about 20 private investors make up the Austin Housing Conservancy. They hope to eventually grow that number to 40 or 50.
“There’s going to be no displacement from our acquisition,” said Steinwedell.
“This was consistent with the vision of having all kinds of homes in all parts of town,” said Frances Ferguson with Affordable Central Texas.
“This is the first city in the world to use this model in this way,” said Austin Mayor Steve Adler.
Adler said mayors from Chicago and Los Angeles have already contacted him to find out more about the project.
“This is a really big deal,” said Adler, noting the city currently has 40,000 apartment units along transit corridors.
“If we don’t do anything, all of those apartment buildings are going to be converted as part of gentrification,” said Adler.
He said that means about 200,000 people will be forced out of their home.
“When that happens, to lose the creatives in a city, you lose the teachers in a city, the city employees in the city, the bank tellers,” said Adler.
Steinwedell said they want to acquire about 1,200 units a year for the next 10 years.
“We need this program to expand because there’s more than just this one property we can save as a community. We can save more properties,” said Adler.
“We are excited to move our first-of-its-kind investment fund from concept to reality. This milestone acquisition meets our goals of preserving middle-income multifamily housing with access to schools, transit, jobs and greengrocers,” said Steinwedell.
“We now have a pipeline of acquisitions that, when closed, will allow us to preserve over 1,500 units and serve over 4,000 residents in Austin. Our partners in the acquisition (including CDT) bring a depth of local housing experience and national investment expertise. We are honored to include them in our first property.”
The Community Development Trust (“CDT”) is a national lender and investor in affordable communities. Working with local, regional, and national partners, CDT makes long-term equity investments and originates and acquires long-term mortgages. In its sixteen years, CDT has invested over $1.2 billion in debt and equity capital to properties in 44 states and regions — helping to preserve and create nearly 47,000 units of affordable housing. CDT is a private real estate investment trust (REIT), a certified Community Development Financial Institution (CDFI), an approved Fannie Mae affordable housing lender, and a member of the Federal Home Loan Bank of New York (FHLBNY).