Durham, North Carolina
PNC Bank, NA has acquired a portfolio of affordable housing communities totaling 2,034 units and 14 properties located across the Southeast. The acquisition represents the largest number of properties acquired by the bank for its preservation efforts in a single transaction.
The properties are existing LIHTC properties that have reached the end of the initial 15-year compliance period and will be in need of recapitalization in the coming years. PNC has brought in new property management and will focus on curing deferred maintenance, stabilizing occupancy and preparing the properties for a potential LIHTC transaction. The properties are located in Atlanta, Savannah, Wilmington, Charlotte, Durham, Norfolk and Alexandria, among others.
The acquisition of the portfolio brings PNC’s investment in preservation transactions to a total of 5,144 units and 34 properties across the United States.
“This latest acquisition is consistent with our mission to acquire ‘at-risk’ communities with the goal of preservation of the affordable rents on a long-term basis,” notes John Nunnery, Senior Vice President and Manager of Preservation Investments for the Tax Credit Solutions group at PNC Real Estate.
PNC Bank completed its first preservation project in 2017 with the sale of Bolton North Apartments in Baltimore, Maryland. The property was originally acquired in 2013 and was sold as part of a transaction where the property was renovated and recapitalized utilizing LIHTCs.
PNC Bank completed its second preservation project in early 2018 with the sale of Deville Manor in Meridian, Mississippi. The property was acquired in 2015 and owned by PNC’s first institutional multi-investor fund. In 2018, the property was sold as part of a transaction where the property will be renovated and recapitalized using LIHTCs.
“Many fund managers view investing in affordable housing as a value-add opportunity where properties can be lightly renovated and rents increased to cover the cost,” Nunnery added. “However, very few think beyond their current ownership and look to long-term preservation when they sell the real estate. It’s this long-term view that makes PNC’s approach unique.”
About PNC Real Estate's Preservation Funds
PNC Real Estate has developed a platform that provides an alternative to tax credit investing whereby investors invest in “preservation” funds. PNC’s preservation funds are used to acquire affordable properties at the end of their 15-year Low Income Housing Tax Credits (LIHTC) compliance period as well as other at-risk affordable rental housing
These properties will be held for a period of time and then sold with the intent of recapitalization with new LIHTC funding, extending the contractual affordability period for another 30 years or more while delivering financial benefits to participating investors
PNC Bank, NA has closed three preservation funds since late 2017, including the initial closing of its second multi-investor fund and two additional funds where PNC is the sole investor. Equity investments from these funds have been used to acquire the portfolio. In addition, PNC Bank provided financing for nearly all the property acquisitions.