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Investing in Reasonable Rents


In order to keep housing rents reasonable in its back yard—and maybe do a better job on the upkeep of those buildings—Penn has entered into the Partnership for Quality Housing Choices in University City. The University and Fannie Mae, the giant home-mortgage-financing corporation, have each invested $5 million in the partnership, while the University of the Sciences (the former Philadelphia College of Pharmacy and Science) has contributed $1.5 million and First Union National Bank is providing up to $30 million in mortgage financing. Trammell Crow, the real-estate management firm, will manage the properties.
    “We’ve been active for a number of months now, and have significant amounts of properties under our control already,” said Tom Lussenhop, Penn’s managing director of institutional real estate. “We’re looking at larger, multi-family buildings with 10 units or above—those which tend to be 40-60 years old, which have served the neighborhood very well for many decades. It’s about preserving, for the long haul, moderately priced rental housing in the neighborhood. And our strategy is to ensure that this housing stock is still around 30 years from now.”
    Penn, he added, “has a real interest in being part of a functioning multi-family housing market.” While he stressed that the housing is “available to anyone,” not just students, he said that “student demand may come to about 50 percent of the market, so it would be natural that a significant number of units would be occupied by students. But a healthy multi-family market is a good thing for Penn.”
    Lussenhop acknowledged there has been some “healthy skepticism expressed toward Penn and its intentions” by some of its neighbors, though most of them have come to see the benefits, too.
    “Every civic association in University City has a list of buildings that have been under-maintained and under-managed and in general caused problems in the neighborhood,” he said. And once they’ve expressed their “suspicions of hegemony,” he noted, “they say, ‘Gee, will Penn take a look at these buildings across the street?’”
    Penn President Judith Rodin, who noted that Penn has long been a “significant force in shaping demand for rental housing in its neighborhoods,” said that the partnership ensures that the University is now “positioned to strategically manage this demand for the benefit of the broader community.”
    Yvonne Haskins, Fannie Mae’s senior manager for community development, said that she expected the partnership to “serve as a model for other communities around the country who are just as interested as Penn in preserving a community while moving forward to making it more livable and more viable for a larger, more diverse group of people.”

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