Impact Growth Capital Newsletter

 This week at IGC:
Projected Delinquency Trends and How Proactive Management Mitigates Risk

Impact Growth Fund

Join Us In Solving The Affordable Housing Crisis

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Dear Partners,

We are closely monitoring a major legislative shift that has the potential to impact rent collections across the workforce and affordable housing sectors in Q4 2025 and Q1 2026.

You may have seen headlines about the "Complete Reconstruction" of the federal SNAP (food stamp) program. While often framed as a political issue, we view this as a direct liquidity event for our tenant base.

Here is the data, the risk analysis, and our mitigation strategy.

The Macro View: “Cleanup” vs. Crisis

New USDA findings have triggered a massive overhaul of the SNAP program to target fraud. The headline numbers are stark:

• 186,000 deceased individuals removed from rolls.
• 500,000 duplicate enrollees identified.
• Millions in confirmed fraud loss.

While ensuring program integrity is necessary, the speed of this "deconstruction" is creating a temporary but severe cash-flow gap for millions of legitimate recipients.

The Housing Gap (Why This Matters to Us)

There is a common misconception that tenants receiving food stamps are also cushioned by Section 8 or other housing vouchers. The data shows otherwise:

• 80% of SNAP recipients receive NO federal housing assistance.
• They live in private, market-rate, or workforce housing (like ours).
• For these households, SNAP benefits represent roughly 30% of their effective monthly purchasing power.

The Risk:
When food benefits are cut or delayed due to system overhauls, tenants face an impossible choice: pay the rent or feed the family.

History shows that in the short term, "the rent eats first," but after 60 days, families prioritize food — leading to a spike in delinquency and eviction costs.

Strategic Response: Proactive Management

We are getting ahead of this potential delinquency wave. Here is our action plan for the affected assets:

1. High Touch Communication:
   Property managers are being trained to identify residents struggling with the recertification process early, rather than waiting for a missed payment.

2. Resource Connection:
   We are partnering with local non-profits and food pantries to provide immediate stop-gap resources for tenants, preserving their cash for rent.

3. Payment Plans:
   We are authorizing temporary, structured payment plans for tenants with verified SNAP disruptions to avoid costly turnover and eviction proceedings.

The Bottom Line

We remain bullish on workforce housing, but we believe informational advantages are key to risk management. By understanding the "Rent vs. Eats" dynamic better than the broader market, we can protect our Net Operating Income (NOI) while maintaining stable communities.

We will continue to update you as this policy rollout progresses.

Sincerely,
Jesse
Impact Growth Capital