Dive Brief:

• Columbia, Maryland-based nonprofit Enterprise Community Partners has announced the first properties participating in its Renter Wealth Creation Fund — an investment vehicle that provides residents of affordable housing with an ownership stake in their properties, according to a press release shared with Multifamily Dive. 
• Sheridan Ridge Townhomes and Willow Green Townhomes, both located just outside of Denver in Arvada, Colorado, are the first properties to participate in the fund. Lakewood, Colorado-based Archway Communities is the developer and operator of both sites.
• Using capital investments from national foundations, banks and individual investors, Sheridan Ridge and Willow Green residents will receive a cash back payment for their on-time monthly rent. Archway will also be able to execute on $1.7 million in renovations and preserve current rent rates and income restrictions.

Dive Insight:

One of the goals of the Renter Wealth Creation Fund is to provide an opportunity for lower- and moderate-income renters to build wealth through housing — something that historically has only been possible through homeownership, according to Enterprise.

In addition to reimbursements for on-time rent, long-term residents also have the opportunity to share in the property’s appreciation value when and if realized through a recapitalization or a sale. This will be open both to current and former residents.

“With the Renter Wealth Creation Fund, we hope to demonstrate that renters can and should have access to the wealth-building opportunities that have historically only been available to homeowners,” said Chris Herrmann, chief investment officer and fund manager of Enterprise's real estate equity business, in the release.

To Herrmann’s knowledge, the Renter Wealth Creation Fund is the first program of its kind. “Collectively, we expect that these three benefits will create a unique environment that helps residents thrive,” Herrmann told Multifamily Dive. “We hope that the Renter Wealth Creation Fund can serve as a model for impact investors nationwide.”

The fund’s capital investors can expect to receive a 4% return on their investment, while 80% of the proceeds of a recapitalization or sale will go to current or former residents, according to Herrmann. Some of the investors, including insurance company New York Life, have also chosen to support the program with grants.

Material benefits

Archway Communities, an affordable housing provider with nine properties in the Denver metro and Colorado Springs areas, chose to participate in this new fund in order to support the wellbeing of its residents, according to George Kelly, chief investment officer at Archway.

“Resident services and support are central to our work at Archway Communities,” Kelly said, “and this partnership with Enterprise Community Partners provides a new approach to fund these critical services and support our residents on their path to a more stable future.”

Enterprise is partnering with tech firm Stake to facilitate the cash-back program, which will also provide additional rewards if the money is saved through the end of the month. This offering was created based on focus group feedback during the fund’s design. The exact terms and amount of cash back will be set by Stake and will vary from property to property.

Sheridan Ridge and Willow Green were constructed in 2003 and 2005, respectively, and contain 125 apartments across 13 residential buildings total. Sheridan Ridge has one- to four-bedroom units affordable to residents earning 30% to 100% of area median income, while Willow Green has two- and three-bedroom units affordable to residents earning 30% to 60% AMI.

Renovations will include floor, roof and window repairs, upgraded security measures and improved drainage. The fund will also provide resident services, including financial education, support groups, youth programming and wellness activities.

Correction: This story has been updated to reflect that the fund's investors can expect a 4% return.