Courtesy of BLVD Capital
To say the Pynchon Terrace / Edgewater condo community is Springfield, Massachusetts’ affordable residential anchor is an understatement.
612 residential units are spread over five city blocks and comprise a “city within the city” comprising 51 buildings, including a 10-story high-rise. Over 80 percent of the units have a long-term housing subsidy contract, and many other renters use Section 8 vouchers. The clean, well-maintained community is central to the low-cost housing strategy of this 153,000-inhabitant town in western Massachusetts.
In June, BLVD Capital, a Los Angeles-based private real estate investment company, completed the purchase of the $ 76 million shared apartment. The acquisition ensures the property’s affordability status for another 20 years, a direct benefit for residents and the city.
The Pynchon Terrace / Edgewater deal shows why “… affordable housing is an acceptable asset class for investment,” said Patrick Luke, principal of BLVD Capital. “Affordable residential real estate is often misunderstood as inferior real estate.
“The reality is that a very large part of the affordable housing stock is in excellent condition. Fortunately, many investors are now realizing this and the mood seems to be shifting towards affordable housing. “
Courtesy of BLVD Capital
This is welcome news for low-income Americans who rely on subsidized housing to have a roof over their heads during the pandemic. For investors looking for stable returns, properties like Pynchon (pronounced PEA-shon) Terrace / Edgewater are a particularly attractive opportunity.
BLVD Capital understands the benefits. “We want to maintain and expand the affordability of housing over the long term through project-based subsidies under Section 8, tax credits for low-income housing, and other local and federal programs,” says Luke. The BLVD team is maintaining an undefined hold time for its properties, and in the case of Pynchon / Edgewater, plans for property upgrades and green building improvements are underway.
The real test of investor sentiment is taking place. One expert who has followed this path closely since the beginning of the pandemic is Jim Flinn, vice chairman of the debt and structured finance team at CBRE Affordable Housing. BLVD Capital selected Flinn’s team for the acquisition capital, a 10-year fixed rate loan through Freddie Mac.
“The pandemic shows that living in Section 8 is one of the safest bets investors can make. There is almost no decline in collections. The occupancy is stable. The funding rates are low. The long waiting lists show the importance of a Section 8 property, ”says Flinn, who also credits Freddie Mac in running the deal. “Your special tariff blocking function immediately after the application is submitted and incentives for an upgrade to environmentally friendly buildings have contributed to the deal reaching the loan amount requested by the BLVD.”
The big winners, of course, are the residents of Pynchon Terrace / Edgewater.
“Subsidized housing is a huge benefit for residents because they have a home even if they lose their jobs,” says Luke. “The cultivation of affordable housing stock is more important than ever. We plan to be part of the solution by providing clean and safe housing to our most vulnerable citizens. “