FINANCING CANADAS AFFORDABLE HOUSING NEEDS March, 2018 WHO IS HPC - - PowerPoint PPT Presentation

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FINANCING CANADAS AFFORDABLE HOUSING NEEDS March, 2018 WHO IS HPC - - PowerPoint PPT Presentation

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FINANCING CANADAS AFFORDABLE HOUSING NEEDS March, 2018 WHO IS HPC HOUSING INVESTMENT CORPORATION? New Canadian lender, dedicated to the affordable housing sector Three Founding Partners: o BC Housing o Manitoba Housing Housing

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FINANCING CANADA’S AFFORDABLE HOUSING NEEDS

March, 2018

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WHO IS HPC HOUSING INVESTMENT CORPORATION?

New Canadian lender, dedicated to the affordable housing sector

  • Three Founding Partners:
  • BC Housing
  • Manitoba Housing
  • Housing Services Corporation (Ontario)
  • Our DNA: Housing Partnership Canada
  • Peer network of affordable housing CEOs
  • More than 250K units across Canada

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BUILDING AFFORDABLE HOUSING

A Global Challenge

  • 2025: 1.6 billion people → inadequate housing
  • 400 million in developed countries
  • $16 trillion → to close housing gap
  • $2 trillion+ for Canada & U.S.

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FIXING THE GLOBAL CHALLENGE

McKinsey recommendations:

1. Unlock government lands 2. Reduce construction costs 3. Increase operational efficiencies 4. Create better financing solutions

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CANADIAN REALITY

Sector Challenges

  • Highly diverse
  • Mostly community based organizations
  • Financing is well outside of comfort zone

FEDERAL NATIONAL HOUSING STRATEGY $15.9B TOTAL NEED OVER 10 YEARS: ~$100B

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Today’s Realities

  • Aging infrastructure
  • End of design life
  • Billions needed
  • Uneven government

funding

Our Vision

  • Business self-sufficiency
  • Leverage the assets
  • Be entrepreneurial
  • More affordable housing

VISION FOR THE SECTOR

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RELATIONSHIPS ARE CHANGING

  • Keep the Mission
  • Change Relationships

Government:

  • versight  partner

Providers:

administrators  housing leaders & builders

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PAN-CANADIAN INITIATIVE

  • Feasibility Study, Morrison Park Advisors
  • Commissioned by Housing Partnership Canada:

ADDITIONAL FUNDING PARTNERS:

  • CMHC
  • PROVINCE OF ONTARIO
  • CITY OF TORONTO AND

A NUMBER OF ONTARIO SERVICE MANAGERS

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Dedicated Housing Lender Ongoing funding stability Depends Possibly No Yes Can handle fragmented sector Somewhat Somewhat No Yes Customized to social housing No Yes No Yes Leverages sector creditworthiness Possibly Yes Yes Yes Low financing costs No Yes Yes Yes Direct to Capital Markets Ongoing funding stability Depends Possibly No Can handle fragmented sector Somewhat Somewhat No Customized to social housing No Somewhat No Leverages sector creditworthiness Possibly Yes Yes Low financing costs No Yes Yes Government Debt Programs Ongoing funding stability Depends Possibly Can handle fragmented sector Somewhat Somewhat Customized to social housing No Somewhat Leverages sector creditworthiness Possibly Yes Low financing costs No Yes Banks Ongoing funding stability Depends Can handle fragmented sector Somewhat Customized to social housing No Leverages sector creditworthiness Possibly Low financing costs Possibly

HOUSING SECTOR FINANCING OPTIONS

Ongoing funding stability Can handle fragmented sector Customized to social housing Leverages sector creditworthiness Low financing costs

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MARKET PRECEDENTS

HOUSING FINANCE CORPORATION, UK

  • Non-Profit Corporation
  • Established in 1987
  • £5 billion loans
  • Direct capital markets
  • A+ credit rating
  • Staff complement of 20

TORONTO COMMUNITY HOUSING CORPORATION

  • $450M direct capital

borrowings

  • AA- credit rating
  • Regeneration of Regent

Park FIRST NATIONS FINANCE AUTHORITY, CAN

  • $10M fed investment

leveraged over $100M loans

  • 60% annual operating

grants

  • A- credit rating
  • “solid competitive position in a

niche market”

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THE MARKETS LIKE AFFORDABLE HOUSING  Well-run operations  Government-ish comfort  Global sector  Rating agency views

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OUR SIMPLE BUSINESS MODEL

ADD UP THE FINANCING NEEDS OF THE SECTOR BORROW FROM THE CAPITAL MARKETS RE-LOAN TO THE SECTOR

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DEMAND FOR LOANS

Our first round call for projects:

  • 20 providers
  • $1B financing need
  • 8,000 new/regenerated units

Estimated Pool of 3,000+ Canadian borrowers

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WHY HPC HOUSING INVESTMENT?

Housing Finance for Housing People, By Housing People

  • Dedicated lender to affordable housing
  • Fixed rate 30+ year loans
  • Housing knowledge
  • Finance expertise
  • Lean, low-cost administration

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Manitoba Challenges

  • Repair aging stock
  • Drive sector self-sufficiency
  • Tackle declining funding commitments
  • Demographics
  • Aging seniors
  • Indigenous
  • New immigrants
  • Mental health needs
  • Accessible
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Manitoba Opportunities with HI-C

  • Mixed use and multi-residential units
  • Mayfair River
  • Better serve low income households
  • Westminister Housing Society
  • More seniors housing
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INITIAL FUNDING

 $20 Million from federal Innovation Fund*

 Loan loss protection  Leverages into $200M first tranche lending capacity

 $2.5 Million from the 3 founding partners

 Start up operations

 $200 M loans → 2,000 new affordable homes

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2018 TIMELINE

$20M Fed Investment and $2.5M Start-Up Commitments Focus on Take Out Financing for Tranche #1 Meet Tranche #1 Borrowing Candidates Bond Holder & Credit Rating Agencies Prep Bond and Loan Documents Build Pipeline for Tranche #2 and beyond Fall 2018: Close $200M Tranche #1 projects

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Q&A QUESTIONS & ANSWERS

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CONTACTS

Shayne Ramsay, CEO, BC Housing sramsay@bchousing.org Steven Spry, CEO, Manitoba Housing steven.spry@gov.mb.ca Howie Wong, CEO, Housing Services Corp hwong@hscorp.ca Joshua Broadhead, Senior Project Officer, BC Housing jbroadhead@bchousing.org Sandra Hodzic, Social Innovation Lead, Manitoba Housing Sandra.Hodzic@gov.mb.ca