Above photo: The Waxery was the Kensington Corridor Trust’s first commercial tenant. Melissa Simpson.
Eight new acquisitions were made last year.
The Kensington Corridor Trust is growing its roots and capacity.
The first time Yolanda Del Valle came to work at Sherry’s Restaurant, she was a teen covering a friend’s shift at the popular local diner, located for 50-plus years at the corner of Kensington and Ontario Avenues in Philadelphia.
Eleven years ago, Del Valle returned to Sherry’s as an employee, doing everything from serving to dishwashing to minding the griddle. This past November, she became the owner. And Sherry’s got a new landlord: its community.
The diner’s building, which includes three apartments above the restaurant, was acquired a little over a year ago by the Kensington Corridor Trust, a community-controlled commercial real estate entity that recently celebrated its fifth birthday. Through the trust, the surrounding community that has patronized Sherry’s for the past five decades is now the restaurant’s landlord.
Del Valle couldn’t be happier about it. “I can’t ask for anything else in a landlord,” Del Valle says. Normally, she says, landlords are just focused on getting their money. But the Kensington Corridor Trust’s approach is different.
“They’re more of a get-it-together, and we’re going to take care of this, and we’re going to help you,” she says. “You see them up and down the avenue. These people are actually in the streets trying to get things done. They ask the community, what do you guys want to get done here? What do you guys want to see? And they’re trying to make it happen.”
Born from collaboration with residents
The Kensington corridor has seen much better times. The corridor’s mix of small and large buildings reflects its history as a place that once teemed with residents walking to work at factories and warehouses nearby or hopping on the Market-Frankford Elevated Train line running overhead along the avenue to get to jobs in other parts of the city. When Del Valle was growing up, there were street festivals along Kensington Avenue.
Today, the intersection of Kensington and Allegheny Avenues, which is just a short walk from Sherry’s, has gained notoriety as the epicenter of the region’s opioid epidemic. The Kensington corridor’s decline has discouraged many landlords from keeping up with basic maintenance: There’s little financial incentive for traditional property owners to spend on repairs or keep up with updated building codes if they don’t believe the rental income from those properties would justify the expenses.
“With the previous landlord, if I needed work done, it would take a long time,” Del Valle says. “Nine times out of 10, I’d probably be fixing it on my own.”
As Next City previously reported, the Kensington Corridor Trust emerged from a dialogue between community members and Shift Capital, a Philly-based real estate development firm created with a mission to revitalize disinvested communities.
Residents along the corridor questioned Shift Capital about its intentions. Was it truly looking to develop real estate in ways that would benefit existing residents of the neighborhoods along Kensington Avenue? Or was it just taking advantage of the opioid crisis depressing real estate prices and amassing a huge portfolio on the cheap — before flipping the properties later and forcing out long-time residents and local business owners who can’t afford higher rents or higher property taxes after the neighborhood recovers?
Rather than ignoring those concerns, Shift Capital partnered with local entrepreneurship incubator IF Lab, local nonprofit Impact Services, and the Philadelphia Industrial Development Corporation to establish Kensington Corridor Trust as a vehicle for residents to take control of real estate along Kensington Avenue and develop it in ways that truly reflected their collective vision as a neighborhood. (Note: This story has been updated to include more details about the trust’s creators.)
As Next City later reported, it wasn’t easy convincing residents and business owners to join the trust’s initial board. Kensington Corridor Trust spent much of its first few years working on its legal structure and governance — while working in parallel to raise funds and begin acquiring properties. Today, Kensington Corridor Trust consists of two layered entities.
At the top of Kensington Corridor Trust’s structure is the actual neighborhood trust, also known legally as a perpetual purpose trust. Under the model, the trust is governed by a trust stewardship committee, which in this case consists of nine members elected from residents and local business owners within the trust’s catchment area. The trust entity holds the deeds to the properties in the portfolio, and the trust stewardship committee makes major strategic decisions like setting rents, determining what types of businesses to allow as tenants, or defining the catchment area — ensuring major decisions align with the trust’s overall purpose and goals. Last year the stewardship committee extended the catchment area by one more block along Kensington Avenue.
Tuesday, Feb. 18 is the deadline for applying to run for one of this year’s open seats on the trust stewardship committee. The minimum age to run and serve is 16. Unlike a standard nonprofit, the trust compensates stewardship committee members for their time in meetings, paying them double the local living wage or currently $44 an hour. Five residents submitted their names for two open seats. Current members of Kensington Corridor Trust stewardship committee will submit their votes at their first quarter meeting in March.
“Last year when we did the election cycle, we received applications from a bunch of people we didn’t even know, just residents in the neighborhood who live there, who want to be engaged and involved,” says Adriana Abizadeh, Kensington Corridor Trust’s executive director. “When that happens it gives us new networks and new expertise and that’s very exciting.”
Below the neighborhood trust is the original nonprofit entity incorporated five years ago, which employs Kensington Corridor Trust’s growing staff and handles the day-to-day operations. That includes fundraising, identifying properties for acquisition, negotiating with sellers, construction manager for gut rehabs or new construction, and also serving as property manager and broker. The non-profit has a separate board of directors, also selected through open calls to the community.
A whirlwind year
Kensington Corridor Trust is coming off its busiest year yet, making eight acquisitions in 2024. The trust now owns 30 properties, which include a mix of vacant lots and mixed-use buildings all along Kensington Avenue. Some have occupied storefront and residential tenants; some have vacant storefronts but apartment residents above; others have a mix of occupied apartments and vacant apartments that need gut rehabs.
All told, the trust’s properties currently include 26 actively leased affordable apartments and 14 active storefronts, with another 25 or so apartments and seven more storefronts in the rehab and construction pipeline.
“Last year was a really crazy whirlwind of a year,” Abizadeh says. “A lot of properties went up for sale, there were some private developer exits that happened, and so I don’t anticipate that happening again this year. This year we anticipate five acquisitions.”
The trust recently made its largest and first multi-million dollar acquisition to date, a mixed-use building at the corner of Kensington and H Street. Acquired for $2.3 million from Shift Capital, the building features 16 residential units above two commercial storefronts anchored by the Sunday Love Project, a food pantry that uses the client choice model that allows participants to select what they take home from the pantry’s shelves.
“Before they took it to market, they called us and said, hey, before we put this on the market, do you want to acquire?” Abizadeh says. “And I was like, heck, yeah, we want to acquire it. Give me a second to go find some capital. I’ll be right back.”
Kensington Corridor Trust has set a target for itself to borrow $20 million for acquisitions, rehab and construction. So far it has borrowed $12 million, with another $3 million in final approval stages.
All of Kensington Corridor Trust’s debt is unsecured, meaning the lenders do not take any properties as collateral and the trust does not have any cash to serve as a backup source of repayment in case it goes belly up. These aren’t loans that banks or even most community development financial institutions are willing to make, but the trust has found success with a few smaller foundations that believe in the trust’s vision and values. There are also around 20 or so individual investors who pooled their personal wealth into a low-interest loan to the trust because they, too, share the trust’s values.
“We really want 0% interest loans, but we’ll take one, and if you can’t do one, then we’ll take two, but if you can’t do two, we cannot take three or four or five or six percent,” says Abizadeh. “It’s a slimmer pool of people who are willing to lend for 10 years unsecured at 2% or below.”
Keeping the interest it pays to investors so low ensures that the trust can make its residential and commercial units affordable to people and local businesses in the neighborhood. The trust sets residential rents based on income, targeting households in the 30-60% area median income range, or between $575 a month for a one-bedroom/one-bath and $1,500 a month for a three-bedroom/two-bathroom. Meanwhile, the trust sets commercial rents at 75% of comparable market rate rent along the corridor, which currently comes out to $750 a month on average to rent a typical-sized storefront in the trust’s portfolio.
Some of those funding sources, however, aren’t going to last — by design. The Kataly Foundation, based in Oakland, California, has been one of Kensington Corridor Trust’s biggest lenders and grantmakers. But Kataly is a spend-down foundation, meaning that it is planning to give away all of its wealth, making its final payments to grantees in 2027.
Eventually, Kensington Corridor Trust anticipates that rental income from its portfolio will cover most or all of its staffing and programming operations as well as making interest payments to its lenders. But for now, the nonprofit still raises grant dollars from foundations to cover its operations, which now include a seasonal community gardener.
“The garden is a very physical reminder that beauty is possible,” Abizadeh says. “That change is possible here, and that neighborhood-led initiatives can be not just imagined.”