Affordable Housing Preservation Investments

PNC Real Estate has developed an innovative long-term strategy for institutional investors to invest in affordable housing across the U.S. through their Affordable Rental Housing Preservation Funds. The program is backed by a considerable corporate sponsorship position and the ability to provide acquisition financing. The funds will acquire affordable housing properties throughout the U.S. with the intent to preserve and extend long-term affordability utilizing Low Income Housing Tax Credits, as well as to generate cash returns.

The LIHTC program has generated nearly 3.7 million affordable housing units since its inception in 1986. Every year approximately 120,000 units reach the end of their 15-year compliance period, triggering a sale or recapitalization of the asset. Often, as properties are being marketed for sale, market rate and affordable housing buyers compete to acquire the properties. For buyers intent on preserving affordability, purchase offers are often conditioned on obtaining new tax credits, but are faced with an uncertain execution and a lack of short term capital to finance the acquisition. As a result many properties are being sold to third party owners/investors with little or no interest in providing affordable housing beyond the statutory affordability period. As these affordability restrictions expire, many property owners intend to replace economically disadvantaged tenants and raise rents, often to market rates, resulting in the loss of affordable rental housing.

PNC Real Estate's Preservation Funds seek to acquire affordable properties nearing the end of their 15-year compliance period to keep housing affordable across the U.S. As part of this work, PNC may partner with state allocating agencies and strategic developer partners to redevelop acquired properties utilizing LIHTC's.

Benefit of Preservation Fund Investments:

• Increase Cash Flow: Returns are in the form of cash distributions, not tax credits and losses.
• Increase Cash: Operating cash flow potentially increases corporate cash and would positively impact EPS.
• Increase Book Value: provides potential for increased earnings, which would increase the investor’s book value.
• Social Benefit: Corporations may share in the social benefit provided by the development of affordable housing.
• CRA Obligations: May satisfy CRA obligations for banks and socially responsible investment objectives for Insurance Companies and Pension Funds.
• Stabilized Assets: Elimination of construction and lease up risk inherent in new LIHTC transactions.