FINANCING CANADA’S 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 Services Corporation (Ontario) o • Our DNA: Housing Partnership Canada o Peer network of affordable housing CEOs o More than 250K units across Canada 2
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. 3
FIXING THE GLOBAL CHALLENGE McKinsey recommendations: 1. Unlock government lands 2. Reduce construction costs 3. Increase operational efficiencies 4. Create better financing solutions 4
CANADIAN REALITY FEDERAL NATIONAL HOUSING STRATEGY $15.9B TOTAL NEED OVER 10 YEARS: ~$100B Sector Challenges • Highly diverse • Mostly community based organizations • Financing is well outside of comfort zone 5
VISION FOR THE SECTOR Today’s Realities Our Vision • Aging infrastructure • Business self-sufficiency • End of design life • Leverage the assets • Billions needed • Be entrepreneurial • Uneven government • More affordable housing funding 6
RELATIONSHIPS ARE CHANGING • Keep the Mission • Change Relationships Government: oversight partner Providers: administrators housing leaders & builders 7
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 8
HOUSING SECTOR FINANCING OPTIONS Government Debt Direct to Capital Dedicated Banks Programs Markets Housing Lender No Ongoing funding Ongoing funding Ongoing funding Ongoing funding Ongoing funding Depends Depends Depends Depends Possibly Possibly Possibly No Yes stability stability stability stability stability No Can handle Can handle Can handle Can handle Can handle Somewhat Somewhat Somewhat Somewhat Somewhat Somewhat Somewhat No Yes fragmented sector fragmented sector fragmented sector fragmented sector fragmented sector No Customized to Customized to Customized to Customized to Customized to No No No No Somewhat Somewhat Yes No Yes social housing social housing social housing social housing social housing Yes Leverages sector Leverages sector Leverages sector Possibly Possibly Yes Leverages sector Leverages sector Possibly Possibly Yes Yes Yes Yes creditworthiness creditworthiness creditworthiness creditworthiness creditworthiness Yes Low financing costs Low financing costs Low financing costs Low financing costs Low financing costs No Possibly No No Yes Yes Yes Yes Yes 9
MARKET PRECEDENTS TORONTO FIRST NATIONS HOUSING FINANCE COMMUNITY FINANCE AUTHORITY, CORPORATION, UK HOUSING CAN CORPORATION • Non-Profit Corporation • $450M direct capital • $10M fed investment borrowings leveraged over $100M • Established in 1987 • AA- credit rating loans • £5 billion loans • Regeneration of Regent • 60% annual operating • Direct capital markets Park grants • A+ credit rating • A- credit rating • “solid competitive position in a • Staff complement of 20 niche market” 10
THE MARKETS LIKE AFFORDABLE HOUSING Well-run operations Government-ish comfort Global sector Rating agency views 11
OUR SIMPLE BUSINESS MODEL ADD UP THE FINANCING NEEDS OF THE SECTOR BORROW FROM THE CAPITAL MARKETS RE-LOAN TO THE SECTOR 12
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 13
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 14
Manitoba Challenges • Repair aging stock • Drive sector self-sufficiency • Tackle declining funding commitments • Demographics o Aging seniors o Indigenous o New immigrants o Mental health needs o Accessible
Manitoba Opportunities with HI-C • Mixed use and multi-residential units o Mayfair River • Better serve low income households o Westminister Housing Society • More seniors housing
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 17
2018 TIMELINE $20M Fed Meet Fall 2018: Investment and Tranche #1 Prep Bond Close $200M $2.5M Start-Up Borrowing and Loan Tranche #1 Commitments Candidates Documents projects Focus on Bond Build Take Out Holder & Pipeline for Financing Credit Tranche #2 for Tranche Rating and beyond #1 Agencies 18
QUESTIONS & Q&A ANSWERS
CONTACTS Shayne Ramsay, Steven Spry, Howie Wong, CEO, BC Housing CEO, Manitoba Housing CEO, Housing Services Corp sramsay@bchousing.org steven.spry@gov.mb.ca hwong@hscorp.ca Joshua Broadhead, Sandra Hodzic, Senior Project Officer, BC Social Innovation Lead, Housing Manitoba Housing jbroadhead@bchousing.org Sandra.Hodzic@gov.mb.ca
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