Nonprofit Partnership Preserves 345 Single-Family Twin Cities Homes

A partnership led by Twin Cities-based nonprofit Brick By Brick (B3) and Housing Partnership Network (HPN), a national intermediary, purchased a portfolio of 345 single-family affordable homes sold by sellers managed by Pretium, a specialized investment management firm focused on U.S. residential real estate, that acquired the homes in 2021. The sale will provide stability and continuity for current residents and affordable homeownership opportunities for homebuyers. The single-family homes are located across cities in the seven-county metropolitan region.

The portfolio is made up entirely of non-subsidized naturally-occurring affordable housing, or NOAH, with an average property value of $285,000. It includes a mix of currently occupied and vacant properties. Following this transaction, houses may be either maintained as rental properties for current residents or sold at affordable prices to income-qualified homebuyers, including current renters.

The homes will be available to homebuyers in the metro at around 70 percent of the area median resale price. The average value of houses in the portfolio makes these homes affordable to qualified homebuyers for whom homeownership is typically out of reach.

Minnesota has among the highest racial homeownership disparity in the nation. Recent data shows white Minnesotans own homes at a rate over 50 percent higher than Black Minnesotans. This has implications for asset building and generational wealth.

The Twin Cities region has a shortage of single-family homes affordable and available to median-income homebuyers. This purchase will add hundreds of homes targeted to that population.

Partnerships with local nonprofits are key to these funds and programs. “Community engagement is a key component to the success of this transaction,” said Wayne Meyer, President of B3. “We have already developed partnerships with local nonprofits and plan additional engagement with more organizations who work to support affordable homes for Minnesotans. When we expand this model to other regions in the country, we will partner with local organizations to ensure success.”

Tenants who currently rent their homes may continue renting. No current residents who are in good standing in their lease terms will be displaced.

Currently vacant homes will be renovated by locally based contractors. The nonprofit partnership will then sell the properties to Twin Cities Habitat for Humanity, HPN members, and other local nonprofit organizations, who will then sell to low- to moderate-income (LMI) households engaged in their organization’s programs, or sell directly to renters after renovation, if needed.

“Our goal is to provide stable housing and good quality homes that lead to multi-generational wealth-building,” explained Scott Fergus, CEO of B3. “Community reinvestment efforts, like the fix-ups these rental and sale properties will receive, have long-lasting block-by-block benefits. We break down barriers and build wealth that only homeownership can provide.”

A key sales strategy is to sell renovated properties to current tenants and qualified buyers. The partnership of B3 and HPN will engage with a network to provide homeownership and financial counseling services to tenants and buyers to build toward homeownership success. This network includes Minnesota-based affordable housing and community development organizations Twin Cities Habitat for Humanity, Project for Pride in Living (PPL), Greater Metropolitan Housing Corporation, HOM Coalition, and Minnesota Homeownership Center.

B3 and HPN are also working with Grounded Solutions, a national community land trust network, to reach additional homebuyers. This strategy partners with community land trusts and land banks to purchase properties directly and then sell them to qualified homebuyers. Community land trusts enhance affordability for homebuyers by preserving affordability through nonprofit land ownership. Land banks enhance affordability and community stability by holding property until it can be put to productive use. Local organizations involved in this transaction include Land Bank Twin Cities, Rondo Community Land Trust, City of Lakes Community Land Trust, and Homes Within Reach.

“This transaction is transformational,” said Robin Hughes from the Housing Partnership Network. “This sale of single-family homes to local nonprofits will improve the lives of current residents and new homebuyers. This is a new model we will replicate in other regions of the country, with local partners.”

Sellers looking for a socially impactful method for the sale of their properties can work with this kind of partnership. “We are open for business and seeking new deals,” explained Katie Rodriguez, EVP, Capital Markets, Housing Partnership Network. “Our consortium’s expertise and experience in this space should give sellers, funders, state government leaders, and local government officials confidence about this model that addresses racial homeownership gaps and invests in communities.”

"Making progress toward solving the affordable housing crisis and the racial homeowner gap needs to involve multiple stakeholders from our community," said Bryan Toft, Chief Revenue Officer at Sunrise Banks. "We are proud to be part of this initiative to create more stable, supportive housing for those who need it most in the Twin Cities."

“This multi-year partnership contributed to the development of our First Look Home program, launched earlier this year, that is focused on providing mission-based nonprofits access to homes for sale in our markets,” said Josh Pristaw, Head of Real Estate at Pretium. “The level of community support and the complex capital stack developed by these nonprofits is a model providing them a real seat at the table when institutional owners are selling assets in local markets.”

Investors include lead bank Sunrise Banks, N.A., along with participating banks Choice Bank, Think Bank, and North American Banking Company; McKnight Foundation, Pohlad Family Foundation, Bigelow Foundation, Land Bank Twin Cities, Grounded Solutions Network, Housing Partnership Network, and B3 (Brick by Brick).

----

About the Key Partners

Brick by Brick and Housing Partnership Network formed a partnership committed to a community-driven vision and pathway for affordable homeownership and high-quality, stable, affordable rental homes.

Formed in 2016, Brick by Brick’s (B3) mission is to provide a community-oriented approach to the investment and management of distressed assets and real estate developments that advance community stabilizing outcomes focused on homeownership opportunities for LMI households and families of color. With an office in Minnesota, B3 is led by Scott Fergus and Wayne Meyer.

Housing Partnership Network is made up of 100+ leading nonprofit housing developers, owners, and financial institutions across the U.S., networked for significant impact. It delivers creative solutions to address gaps in the affordable housing sector and to scale and advance members' missions.