The impact of hurricanes in the South-East, and wildfires in the West, has caused a dramatic shift in the insurance markets.
In Florida and California alone, many insurance providers have ceased writing new insurance policies and will no longer underwrite new business in those states. For existing policy holders, we are seeing premiums double (and triple) depending on a community’s location and its ‘increased’ risk.
As HPI is a long-term owner and a nationwide operator of HUD affordable communities, time & geography naturally help mitigate our financial risk to these regional increases. But for a regional based sponsor/owner of a single community (or a handful of communities) in a high-risk state, the impact of these insurance increases will be devastating.
As an owner of a HUD building, there is no easy mechanism to cover an increase in operational expenses when your insurance premiums double– you can’t lease more units and you can’t pass on the cost to residents by simply increasing their rent. Ultimately, increases in operational costs, with no increases in income, will mean the value of your community will decrease.
If your organization is looking to raise capital through the release of trapped equity in its HUD community, now is the time to act – before the full effect of pricing increases is realized in the coming years.
A sale to HPI would ensure:
- The community remains affordable within the HUD program.
- The staff and residents would not be impacted.
- There would be zero affect to any community group that uses the facilities for their meetings or cultural programs.
- The building would not be re-named and your members could still be involved in resident programs if they wished.
- The building would be recapitalized and rehabbed where needed.
- A large amount of equity would be released to your organization, which you could use to fund other programs, outreach, missions etc.
HPI has vast experience in preserving affordable housing from organizations like yours. We would appreciate an opportunity to speak with you if a disposition is something you would consider exploring with us. Obviously, we are not asking you to decide or commit to a disposition at this stage, we simply would love an opportunity to speak with you and discuss the process and our experience in HUD preservation.
If your organization is looking to raise capital through the release of trapped equity in its HUD community, schedule a call with a Preservation Team Member at the link below.