Affordable Housing Portfolio Trades for $180M

Kline Enterprises sold the seven New Jersey properties consisting of 1,009 units.

for rentOrange, N.J.—Kline Enterprises has sold a 1,009-unit affordable housing portfolio managed by First National Properties for $180 million. The buyer was a joint venture between Hudson Valley Property Group, Red Stone Cos. and Wheelock Street Capital.

The senior- and family-affordable assets are in Paterson, Orange, East Orange, Metuchen, Old Bridge, Hazlet and East Windsor, all locations in New Jersey. The seven properties are subsidized by long-term, project-based Section 8 contracts and encumbered by various regulatory restrictions.

The $180 million value is the result of a sophisticated financing structure specific to portfolio transactions. The sale of the portfolio will ensure long-term affordability for over 2,500 residents and preservation of the assets through sustainable upgrades and planned renovation over the next several years. SVN Affordable/Levental Realty was the listing broker tasked with marketing on behalf of Kline.

“This was a complex transaction that required finesse,” said Ronald B. Kremnitzer, lead counsel on the transaction. The deal, he pointed out, included multiple contracts and an in-depth understanding of regulatory hurdles.

Community Realty Management will act as third-party property manager, while retaining the majority of the existing staff members at each of the properties. Financing was provided by Walker and Dunlop and Fannie Mae, and Goodwin Procter LLP, Nixon Peabody LLP and Berman Indictor LLP served as purchaser’s counsel for the transaction.