Environmental Finance's Bond Awards 2023

Sustainability bond of the year - US muni bond: Preservation of Affordable Housing

In April 2022, Preservation of Affordable Housing (POAH), a Boston-based non-profit affordable housing developer, issued a $75 million sustainability bond.

This transaction represents the first time POAH has accessed the public capital markets.

Bond proceeds were used to refinance corporate debt (loans taken on by POAH to finance its overall mission), refinance property-level debt, and for additional mission-aligned uses such as the financing of pre-development expenses.

The transaction provided unsecured corporate-level flexible capital, no geographic or programmatic restrictions, and no ongoing financial covenants, according to POAH.

"The bond proceeds have quickly expanded POAH's mission impact – they represent more resources to advance our work, as well as flexibility in a challenging economic environment," said Allison Adduci, POAH's chief financial officer.

POAH has built or preserved nearly 13,000 units of affordable housing to date. POAH's properties serve almost 21,000 residents, with an average household income of 23% of Area Median Income. POAH's mission explicitly focuses on counteracting the legacy of exclusion and about 60% of its residents represent Black and Indigenous people of colour (BIPOC) populations. POAH provides resident services for the majority of its properties through property-based Community Impact Coordinators, who provide residents with direct support and connections to community resources.

In addition to its social mission, POAH has also long been focused on ensuring its affordable housing communities are as environmentally sustainable and energy efficient as possible. Since 2010, POAH states its environmental improvements have resulted in annual energy usage reductions totalling more than 10 million pounds of CO2 avoided and more than 100 million gallons of water saved.

Deal highlights:

Issuer: Preservation of Affordable Housing
Size: $75 million
Maturity: 1 December 2032
Coupon: 4.47%
Use of proceeds: Affordable housing. The bonds map to four UN Sustainable Development Goals: Goal 1: No Poverty; Goal 7: Affordable and Clean Energy; Goal 10: Reduced Inequalities; Goal 11: Sustainable Cities and Communities.
External reviewer: S&P Global
Lead manager: Morgan Stanley
Credit rating: S&P Global (A+)