INSIDE THE DEAL: Sale of Affordable Housing Surmounts Difficulties in LIHTC Market
- Jan 27, 2009
By Keat Foong, Executive EditorCarpentersville, Ill.— Marcus & Millichap Real Estate Investment Services recently helped facilitate the $23.05 million sale of an affordable housing project despite turmoil in the housing tax credit market. The company arranged the sale of Fox View Apartments, a 373-unit project-based Section 8 community in Carpentersville, Ill. Scott Harris, senior vice president investments, said that a number of such affordable projects do sell throughout the year, but what was unusual about this affordable property was its size. Eighteen bids were offered for the property, and the one from the tax credit developer was the most competitive bid. Harris and Kyle Shoemaker, a multi-family investment specialist, both in Marcus & Millichap’s Oak Brook, Ill. office, represented the seller. Also representing the seller were Paul Davis, first vice president investments, and Andrew Daitch, vice president investments, both located in the firm’s Detroit office. Marcus & Millichap also represented the buyer. The new owner is financing the acquisition and renovation with the 4 percent Low Income Housing Tax Credit program. “The new owner of Fox View Apartments has acquired a large multi-family property within 35 miles of a major metropolitan area with a 95 percent Housing Assistance Payments (HAP) contract in place and existing Section 236 mortgage,” says Harris.Located at 3 Oxford Road, the 326,868-square foot apartment community is situated on 20.15 acres adjacent to Dundee Crown High School, and is within walking distance of Perry Elementary School. The sale was placed under contract in early 2008, but took extra time to close because of the significant drop in large investor appetite for tax credits beginning in January 2008, says Harris. The buyer had no trouble obtaining the first mortgage bond, but had some difficulty getting a tax credit partner, he says. The seller eventually granted the necessary extensions for the restructuring of the deal and provided a portion of the financing, he says.