Barings has originated $53.5 million of bridge and long-term financing for the development of an affordable housing property at 3368 Washington in Boston, a project that has a rare focus on housing homeless residents of the city.
Developed by TCB and Pine Street, 3368 Washington will target residents making 30-80 percent of Area Median Income (AMI). Courting this underserved demographic was crucial to funding the project, according to Daron Tubian, head of affordable housing investments at Barings.
“Most traditional affordable housing projects cater to household with incomes ranging between 30% and 80% of area median income (AMI), which qualifies a project for low-income housing tax credits (LIHTC). Above 80% [of AMI], housing units cannot generate credits, requiring a sponsor to incorporate a replacement source for the loss of LIHTC equity in order to sort out their overall sources,” Tubian said.
The project was a complex public-private partnership, with numerous investors including Bank of America and the Massachusetts Department of Housing and Community Development.
“The capital structure, the number of players involved between public and private was quite elaborate, given the $110 million projected total development cost,” said Tubian.
Crucial to Barings’ participation was its ability to provide the bridge financing portion of the funding through a private placement, a cost saving arrangement that is rare in affordable housing partnerships. “In this case, Barings was able to work through a special approval process to ultimately do a private placement on that bridge facility,” Tubian noted.
Another key to the deal was the project’s prioritizing housing the city’s homeless population.
“In high barrier markets one of the key determining factors for receiving allocation of credits or volume cap for your project is to have a set aside for homeless individuals or other targeted groups like veterans that face extensive challenges in securing housing. This is an important component of supportive housing within the affordable housing sector. There is an affordable housing crisis in the country, and you can’t address that without also trying to tackle the issue of homelessness,” said Tubian.
Public-private partnerships like this will be crucial to solving the country’s affordable housing woes, according to Tubian.
“There is just so much demand for affordable housing that public entities appreciate the importance of partnering with private institutions to collectively find viable and hopefully long-lasting solutions,” he said.