How Affordable Housing Can Compete

Armed with funding from the private sector, the Housing Partnership Alliance is pioneering a new way to create affordable homes and stave off gentrification. Their Housing Partnership Equity Trust (HPET) is a for-profit investment vehicle that purchases and retrofits property and then preserves low rents. By leveraging financial clout alongside the neighborhood know-how of local housing nonprofits, the HPET can compete with major developers to close property deals.

The article discusses the HPET’s newest acquisition, Damen Court on the Near West Side of Chicago, which it purchased for approximately $15 million. For each project, HPET partners with a local nonprofit, in this case the Hispanic Housing Development Corporation. By preserving affordability and increasing energy efficiency in its properties, the HPET pursues a triple bottom line investment strategy: profit, social justice, and environmental sustainability.

The HPET has received investment backing from Ford and Prudential along with credit from Citibank and Morgan Stanley. In spite of several challenges, including a rate of return that is hovering 2.5% below the average for U.S. real estate investment trusts, the HPET is making money. Leadership appear confident the trust can sustain itself long-term. Although the HPET collaborative system is still experimental, it may prove to be a profitable way to preserve mixed-income urban communities.