Real estate and development firm Gerding Edlen is spearheading a new effort to preserve affordable housing in the Portland-metro area.

The Portland Affordable Housing Preservation Partnership was established by Gerding Edlen and Meyer Memorial Trust in October 2019. The partnership’s primary aim is to purchase and upgrade multifamily properties, and then offer units to people making between 60 and 120 percent of the regional median family income. Ultimately, the group wants to improve existing affordable units without displacing current residents.

The partnership recently acquired its first property: the Golfside Apartments in Gresham. Meyer Memorial Trust supplied $20 million to purchase the 53-unit property at 1999 N.E. Division St.

“Basically it fit the strategy really well,” Gerding Edlen partner Jill Sherman said. “We don’t have the ability to spend a ton per unit on renovations, so we do need a property that’s been pretty well kept. We do address issues that need to be fixed, but in general what we’re trying to do is buy a property that is in reasonably good shape, address deferred maintenance and improve water and energy efficiency, and then maintain the property over a very long period of time.”

The partnership’s fundraising goal is $100 million. Potential investors would likely be other foundations and high-net-worth individuals who have an active interest in the group’s goals, Sherman said.

“We’re trying to encourage investors to think of it as a different type of investment,” she said. “It’s counter cyclical – demand for lower-rent units is going to be high even in a downturn. So, these are full today, and you should be able to keep them full. There aren’t a lot of the risks traditional real estate development does have. We’re suggesting it has a return that is more like a fixed-income vehicle.”

That may mean returns as modest as 2 percent, Sherman added. But the risk should correspond with the returns.

“It’s definitely a new way of thinking about an investment in what is still fundamentally real estate,” she said. “It’s not a slam dunk that you explain and every institutional investor says, ‘Oh we want to do that.’ It will take proving.”

Potential properties are being scouted by the partnership. It is targeting communities previously considered more affordable but now are experiencing rapid increases in property values relative to the metro area. Gresham and much of East Portland fits that bill, Sherman said.

“There may be other areas that might be similar, like Gateway, where there’s not a lot of new construction and a lot of older units that aren’t subsidized but are affordable,” she said.

The partnership’s acquisition of the Golfside Apartments did not go unnoticed.

“Gresham’s housing policy recognizes the importance of having a full range of quality housing for its current and future residents,” said Elizabeth Coffey, the city’s communications manager. “Through that policy, the city also supports the rehabilitation and revitalization of our housing supply, so projects like these where there are investments being made have the potential to increase the quality of housing for residents.”

Now, at least two other potential acquisitions are in the works.

“We’ve just started over the past few months where we’ve been able to start getting serious about properties to acquire,” Sherman said. “That was our first closing, but we have another imminent and another tied up in due diligence.”

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