PNC Bank plans to expand its affordable housing lending footprint following the close of a $181 million lending fund focused on developing and rehabilitating the properties for families and seniors.
The Pittsburgh-based bank’s fund, which closed on September 7, includes backing investments from 12 national banks and insurance companies. PNC is aiming to provide financing for nearly 1,800 affordable housing rental units at 17 multifamily assets across 13 states as part of its deployment strategy.
Todd Crow, executive vice-president and head of PNC Tax Credit Solutions, said the fund has already acquired nine properties, and construction has begun in several states, including California, Michigan, New Jersey and Oregon, among others. “Commitments have been formalized with an additional eight investments and we hope to begin construction soon,” he noted.
PNC was not able to disclose the specific investor list among the dozen backing the fund. Todd said of the 12 investors, eight are repeat investors with PNC who have been involved with one or more of the 90-plus syndicated tax credit funds the bank has launched over the years. Four of the investors are new to a PNC fundraise with one investor choosing the fund to make their first low-income housing tax credit (LIHTC) investment.
“PNC has syndicated 92 corporate funds across LIHTC, new markets tax credit (NMTC), housing tax credit (HTC) and preservation business lines, including Fund 84, the most recent LIHTC,” Crow said. “We view the closing of Fund 84 as the continuation of our commitment to both developer and investor clients as well as the residents in the rental communities created by these investments.”
The bank – akin to peers such as Nuveen, PGIM Real Estate and JPMorgan Chase among others – is furthering its efforts to develop, rehabilitate and preserve affordable housing assets as a means of addressing the housing crisis currently gripping the US.
Data from the National Low Income Housing Coalition shows no state has an adequate supply of affordable rental housing for the lowest income renters.
“The US has a shortage of 7 million rental homes affordable and available to extremely low-income renters, whose household incomes are at or below the poverty guideline or 30 percent of their area median income,” the NLHIC reported in April 2022. “Only 36 affordable and available rental homes exist for every 100 extremely low-income renter households.”
For its capital raising process, PNC discussed deals with targeted investors on an ongoing basis over the course of several months. “As the housing affordability issue continues in the country, and as we look for ways to offer our clients opportunities to meet their financial and social responsibility goals, we believe there will continue to be strong interest from like-minded investors who want to join PNC in support of new affordable rental housing production,” Crow said.
Additional states included in the deployment areas for the $181 million fund include Connecticut, Florida, Iowa, Kentucky, Minnesota, Missouri, Montana, New York and North Carolina. Crow said the firm uses a robust list of criteria based on real estate fundamentals to evaluate each investment opportunity, noting no detail is too small when it comes to the research process.