Shelter real estate priced as what it is — contracted income. Lease-level analysis of the DHS-funded market: rent per bed and escalation structure across the leases we track, recorded sale comparables, landlord operating expense, where a 6.00% capitalization rate sits against multifamily and rent-regulated benchmarks, the premium purpose-built stock carries over converted buildings, and what all of it means for sizing debt.
- Leases tracked 17 · 2,197 beds
- Avg. total rent per bed $15.7K / yr
- Avg. sale price per bed $175K
- Cap rate, new construction 6.00%
The lease.
Across the 17 leases, total rent runs from $9,800 to $19,100 per bed per year, or about $27 to $52 per bed per day. Eleven of the 17 run nine years. Fourteen escalate 3 percent every three years. Operators reimburse real estate taxes and insurance, and the lease can end if Department of Homeless Services funding stops. Hotel-style shelters with private baths average $17,500 per bed, against $15,200 for dormitories.
What the buildings trade for.
Eight leased-shelter sales in 2021 and 2022 covered 766 beds and $133.8 million. Older, pre-1990 buildings sold between $103,000 and $211,000 per bed. Five new or gut-renovated shelters delivered from 2020 to 2024, 949 beds in all, were valued in 2025 at $210,000 to $275,000 per bed — roughly 20 to 58 percent above those older sales.
What that means for debt.
Shelter income is priced between investment-grade New York multifamily, at about 4.25 to 5.50 percent, and rent-regulated housing, at about 6.5 to 8.0 percent. Brokers quote shelters at 6.00 to 7.00 percent. New construction sits at 6.00 percent. On a new building, stabilized net operating income is about $12,000 to $15,000 per bed. At a 65 percent loan-to-value on a 6.00 percent capitalization rate, that is about $135,000 to $180,000 of debt per bed, a debt yield near 9.2 percent, and a 5- to 10-year fixed-rate term, with full-term interest-only treated as achievable.
Transaction detail anonymized. Debt figures are illustrative. For discussion only; not a valuation opinion, investment advice, or an offer to lend.