When rental buildings are sold, homes that have remained affordable for years can become vulnerable to rent increases.
For non-profit organizations like Homes First, a Toronto-based provider of affordable and supportive housing, acquiring these properties offers a way to preserve affordability for the long term. But acting quickly is often the biggest challenge.
Unlike private developers, non-profits typically need to assemble funding from multiple sources before they can move forward with a purchase. Grants, donations, financing approvals and other pieces of the puzzle all need to come together, often in a highly competitive real estate market.
“Sometimes the numbers don’t quite add up and lenders will just say ‘no,’ like that’s the end of the discussion,” says Jamie Facciolo, Director of Development and Homelessness Initiatives at Homes First.
“By the time the financing is secured, the window to act may have already closed.”
That was the risk facing two apartment buildings for sale at 640 and 644 Kennedy Road in Scarborough. Nearly 70 per cent of the buildings’ 36 apartments were considered affordable, but that affordability could not be guaranteed if the properties were purchased by private investors or developers.
“Vancity said, okay, we have to do something different to make this purchase work,” says Jamie. “And that’s what they did.”
A financing solution with lasting impact
To secure the buildings, Vancity Community Investment Bank, Vancity’s federally incorporated subsidiary, provided a short-term bridge loan that allowed Homes First to complete the acquisition. The bridge financing gave the organization time to secure longer-term, CMHC-insured financing through CMHC’s MLI Select program, which supports affordable and energy-efficient housing.
A City of Toronto Multi-Unit Residential Acquisition (MURA) grant provided a critical foundation for the project. Donations and other equity helped strengthen the financing stack. The bank’s bridge loan helped complete the purchase.
What could have become another loss of affordable housing instead became a long-term community asset, preserving the affordability of the homes in perpetuity.
“Opportunities like this don’t come along every day, and when they do, access to a flexible financing partner can make all the difference,” says Chloe Wong, Commercial Real Estate Manager, Business Development at Vancity Community Investment Bank.
“We’re proud to support Homes First in protecting these homes so they remain affordable for the long term.”
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Vancity Community Investment Bank works with non-profits, housing providers and purpose-driven organizations to develop financing solutions that help bring impactful projects to life.
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