Michaels Buys 8 Affordable Midwestern Assets
Comprising 606 units, the collection spans two states.
The Michaels Organization has acquired an eight-asset affordable portfolio encompassing 606 units in Michigan and Indiana. Center Management, whose owners are retiring, sold the collection.
The seller’s in-house property management arm, which provided operation services across the portfolio, may receive positions within Michaels.
Through this purchase, the communities will remain long-term income restricted. The buyer has earmarked $6 million in capital improvements for the properties built in the 1970s and 80s.
A significant portion of Michaels’ growth over the last two decades came through acquisitions, targeting both single assets and portfolio deals. The company is pursuing off-market transactions, engaging with potential buyers looking to dispose of properties set to reach the end of their affordability periods.
The looming threat of losing affordability restrictions
At a national level, roughly 29,000 private LIHTC units—accounting for 2.2 percent of stock—are on track to meet their initial compliance period’s end this year alone, a recent Yardi Matrix affordable housing report shows. An additional 15,000 units will reach the end of their extended-use period.
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The future of these properties is reliant upon multiple factors, including location, performance and condition. Value-add investors may be tempted by assets in pristine condition, looking to flip them into market-rate communities.
Maintaining income-restricted status could be an option through 4 percent LIHTC, debt and equity subsidies. However, the affordable housing challenges may linger as the available grant volume could fall short of the required capital expenditure for maintenance and repairs.
