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February 13, 2014

Housing Nonprofits Launch Investment Trust to Buy Properties

A coalition of housing organizations has formed the first real-estate investment trust, or REIT, composed of nonprofit groups as a vehicle to draw financing for low- and moderate-income housing projects, reports NPR.

Like traditional REITs, the Housing Partnership Network allows investors to pool resources to purchase real estate and collect dividends. Christopher LoPiano of the Washington, D.C.-based Community Preservation and Development Corporation, one of the participating nonprofits, said the trust reduces housing groups' reliance on public financing, which takes longer to acquire than private capital, hampering their ability to close on available properties.

The network offers a return of about 5 percent to 7 percent, modest compared to private-sector REITs but appealing to investors who want to preserve affordable housing in the bargain. Several big banks and the Ford and MacArthur foundations have supplied an initial $100-million for the effort.