Opening new investment opportunities
Opening new investment opportunities Post-Construction Equity for Multifamily Housing Innovative Financing Products: A Canadian Perspective Building Opportunities Conference: June 3, 2015
New Market Funds Background 1. Market-competitive financial performance with community benefit via disciplined thematic approach 2. Sponsors: Hybrid structure
3. Canadian post-construction equity fund financing affordable multi-family rental housing
2
New Market Funds Overview
$
Post Construction Mid-term Equity
$
Affordable Multi-Family Rental Housing
Investors
Community Partners
$ + Land
$
$ Financial Return Market Returns Quarterly Cash Flow Low Volatility
Community Benefits Long-term Affordability Sustainable Growth Community Capacity
3
Long-term Trends Drive Market Demand for Rental Housing 220%
Changes in Metro Market Affordability Over Past 2 Decades Rents Home Prices
175%
Median Incomes 130% * Data for change in average rents uses 2bedroom apartments 1992-2013. Home prices based on change in Teranet National Bank National Composite House Price Index. Teranet Index dates range for Calgary since 1999; for Montreal since 1998; for Vancouver and Toronto since 1990. Change in Median Income (Before Taxes), 1990-2011 (2011 constant dollars).
85%
40%
-5%
Calgary
Montreal
Toronto
Vancouver Source: Canada Mortgage and Housing Corporation Data Tables
4
Strong Demand but Significant Barriers to Additional Supply New Rental Demand
CMHC estimates suggest median growth in tenant households over next decade of 50,000 annually
Cost of building new multi-family rental buildings is substantially more than cash flows they generate, driving new condominium construction instead
Tenancy Growth
>
New Build
New Rental Supply
Tenancy growth far exceeds supply of new purpose built rental construction for next decade
5
Challenges in Financing Affordable Rental Housing
Sources are Declining: Government funding Philanthropic grants Non-market mortgages
Uses are Increasing: Land values Building costs Soft costs 6
Affordable Housing Continuum and Fund Focus
NMF Fund I Focus Rental housing affordable on average to households with
New Market Funds Background 1. Market-competitive financial performance with community benefit via disciplined thematic approach 2. Sponsors: Hybrid structure
3. Canadian post-construction equity fund financing affordable multi-family rental housing
2
New Market Funds Overview
$
Post Construction Mid-term Equity
$
Affordable Multi-Family Rental Housing
Investors
Community Partners
$ + Land
$
$ Financial Return Market Returns Quarterly Cash Flow Low Volatility
Community Benefits Long-term Affordability Sustainable Growth Community Capacity
3
Long-term Trends Drive Market Demand for Rental Housing 220%
Changes in Metro Market Affordability Over Past 2 Decades Rents Home Prices
175%
Median Incomes 130% * Data for change in average rents uses 2bedroom apartments 1992-2013. Home prices based on change in Teranet National Bank National Composite House Price Index. Teranet Index dates range for Calgary since 1999; for Montreal since 1998; for Vancouver and Toronto since 1990. Change in Median Income (Before Taxes), 1990-2011 (2011 constant dollars).
85%
40%
-5%
Calgary
Montreal
Toronto
Vancouver Source: Canada Mortgage and Housing Corporation Data Tables
4
Strong Demand but Significant Barriers to Additional Supply New Rental Demand
CMHC estimates suggest median growth in tenant households over next decade of 50,000 annually
Cost of building new multi-family rental buildings is substantially more than cash flows they generate, driving new condominium construction instead
Tenancy Growth
>
New Build
New Rental Supply
Tenancy growth far exceeds supply of new purpose built rental construction for next decade
5
Challenges in Financing Affordable Rental Housing
Sources are Declining: Government funding Philanthropic grants Non-market mortgages
Uses are Increasing: Land values Building costs Soft costs 6
Affordable Housing Continuum and Fund Focus
NMF Fund I Focus Rental housing affordable on average to households with
