Affordable Housing’s Double Edged Investment Appeal
During the crisis, Comunidad Partners, a private equity investor in workforce housing in culturally diverse communities, across the US Sunbelt, offered its residents free virtual health services and a “covid calculator” to provide information about claiming government support. “Many folks have the misconception that social impact and ESG is concessionary, that there is a trade off, but they are not mutually exclusive,” argues principal and managing partner Antonio Marquez.
“The value proposition for our investors is having their values aligned with their business objectives. They drive not only an economic return, but also a social return.”
Moreover, providing assistance to tenants makes for resilient income. “Covid has been very profound for our business. In a downturn folks being able to pay their rent and stay in their home can be attributed directly to our ability to support and help them through social impact services. It gave us an opportunity to showcase social impact in action and how it could translate into resiliency in our communities and for our residents,” says Marquez.
Managers in the affordable housing sector admit that investors will face obstacles: building scale when individual assets are often relatively low in value; dealing with a wide variety of state or national bodies in a sector ride with regulation; and acquiring development sites in land-constrained markets where luxury developers can easily outbid low-cost providers. A pivotal challenge, particularly in the US, is overcoming negative perceptions, says Carter. “Sometimes we need to dispel the myths about certain neighborhoods that our industry invests in.
“People have perceptions about who our residents are that are simply not correct. These are people that work hard every day, and have aspirations for their kids, and they are pursuing the American dream. We have to convey that story.”