Pennrose Execs Form New Affordable Housing Investment Firm

The three owners of national affordable housing developer Pennrose have launched a new firm dedicated to tackling the same crisis from a different angle.

Pennrose CEO Mark Dambly, President Tim Henkel and executive board chair Richard Barnhart have launched Contour Housing Partners with Pennrose New York Regional Vice President Dylan Salmons, the new company announced Jan. 25. Salmons will lead Contour as president and managing director, with the other three named as co-founders and board members.

All four will remain in their positions at Pennrose. Salmons will run the day-to-day operations of Contour from Pennrose's New York office in the Dumbo neighborhood of Brooklyn, he told Bisnow.

Contour will invest in affordable multifamily housing with the goal of keeping units affordable long-term, whether through government programs or as naturally occurring affordable housing. The new firm will also consider new development as well as joining other impact-focused entities in partnerships.

“Pennrose is very much focused on new housing production as its prime tool, and we looked around and thought about how we need to be in the preservation space," Salmons said."We didn’t want to distract from the brand or the Pennrose platform.”

The focus of Contour's investment strategy will be on properties approaching the end of finite affordability restrictions, such as buildings funded with Low-Income Housing Tax Credits. Once those periods expire, only the building's owner can decide whether to push rents up to market rate or attempt to keep units affordable. Over 290,000 LIHTC-supported units are two years or less away from losing their restrictions.

Eventually, Contour's founders would like to reach a level where it can launch investment funds that raise immense sums from private equity and institutional capital, Salmons said. But for now, the company will start by spending its own money to sponsor deals and transition to finding project-based financing from family offices and other relationship-dependent sources of capital.

“[Affordable housing] usually takes six sources of capital and as many as 20 sometimes, so we really need to bring our expertise and creativity to bridge that gap, whether scrubbing the data to find the most efficient way to manage the property and improve quality of life, or tapping into new sources of [government] financing that have been released in the last two years,” Salmons said.

The time when an affordable housing subsidy expires is laden with potential controversy, as the University City Townhomes development in Philly's University City demonstrated. As the owner approached the end of its affordable housing contract, it sought to sell the property to a developer that would take advantage of its position in the middle of the most desirable corridor for life sciences real estate in the city.

The ensuing outcry and legislative response from City Councilmember Jamie Gauthier resulted in that property now being tied up in a lawsuit.

“We want to either find opportunities that are struggling with coming to the end of their affordability, or are in a moment in time with an investor, or otherwise have an unclear view of their properties," Salmons said. "Contour wants to come in and provide a bridge to perhaps a new regulatory syndication.”

Though Pennrose is headquartered in the Philadelphia neighborhood of Brewerytown, the majority of its projects are in other markets, from Massachusetts to the Southeast, Ohio and Texas. Pennrose's most recent local milestone was the December completion of a senior affordable housing and healthcare project at the site of the Delaware County Housing Authority headquarters in Woodlyn, Pennsylvania.

Salmons said Contour has already begun identifying potential properties for investment and will use Pennrose's geographies to guide where it makes deals. Contour will also use data Pennrose has gathered from its properties to inform both property management and financial asset management practices. If a building is in a convenient enough location, Contour will also look to hire Pennrose's management business, Salmons said.