NOAH Fund (Naturally Occurring Affordable Housing)
This new investment fund pilots an economic model that captures existing housing, keeping it affordable. This is essential as moderate and low-income renters struggle to find livable housing in the thriving Twin Cities.
$5 million for a 12-year term at 2%; originated in 2017
Good, affordable housing is always in demand – and its low vacancy rates produce reliable cash flows. Experienced property managers with vision and the right financing can avoid the temptation to upscale properties and instead rehab apartment complexes for working people. Greater Minnesota Housing Fund’s NOAH Fund is the first of its kind to provide such financing. McKnight's below-market return has allowed the NOAH Fund to tap new capital at banks and government agencies that was not previously available for affordable housing.
Financial Returns: Too early to evaluate
Social Impact: The NOAH Fund will preserve over 1,000 units of affordable housing in the Twin Cities metro by 2019.
There is a thirst at the national and local level for naturally occurring affordable housing strategies – Freddie Mac was sufficiently enthusiastic that it quickly locked down a partnership with the NOAH Fund to finance the Fund’s mortgages at a fantastic rate. This strategy does not guarantee affordability for each unit in perpetuity, but we are hopeful that it will bring new housing developers and apartment operating companies into the mix.
As of November 2017
Photo Credits: (Top) Greater Minnesota Housing Fund
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