PNC Bank Closes $100M Affordable Housing Fund

By Adriana Pop

Pittsburgh—PNC Bank, the largest bank in Pittsburgh, closed on a $100 million fund that will preserve affordable rental housing for families and seniors across the country.

A view of The Tower at PNC Plaza from Market Square in Pittsburgh

The PNC Affordable Rental Housing Preservation Fund 1 LLC (PNC Fund 1) is one of the first and largest institutionally managed funds offered for real estate investors committed to maintaining affordable rental housing in the United States.

Since 1986, the Low-Income Housing Tax Credit Program has provided affordable rental residences to families and seniors with low- to moderate-incomes. As many of these properties reach the end of their 15-year tax credit compliance period, the buildings may need to be renovated, the existing debt is coming due and the original investors may need to exit the partnership.

“The continued availability of affordable rental housing for families and seniors is at risk across the country as a wave of affordable properties are now being sold to owners with little or no interest in maintaining these properties at affordable rents beyond the current contractual period. As these properties are sold, they are at risk of eventual conversion to market rents,” John Nunnery, senior vice president & manager of Preservation Investments for PNC, said in a prepared statement.

The new PNC Fund 1 will enable investors to acquire affordable properties at the end of their 15-year LIHTC compliance period as well as other at-risk affordable rental housing. These properties will be held for a period of time and then sold with the intent of recapitalization with new LIHTCs, extending the contractual affordability period for another 30 years, while delivering financial benefits to participating investors.

“The new fund is an expansion of PNC’s ongoing efforts to ensure affordable housing is available to families around the country through the tax credit capital program. PNC is positioned to recapitalize and preserve the affordability of at-risk projects while providing an attractive risk-adjusted return to our investors,” added Todd Crow, executive vice president & manager of Tax Credit Capital at PNC.

As PNC’s first multi-investor preservation fund, PNC Fund 1 has seven institutional investors, including PNC Bank National Association, and will be managed by PNC Real Estate.

Since its inception in 1986, the LIHTC program has generated more than two million affordable housing units. The program was originally part of the Tax Reform Act of 1986, leveraging investor equity from the private sector to support the development and rehabilitation of affordable rental housing.

Image courtesy of PNC Bank