ARA Arranges the Sale of a Texas Community

ARA arranges the sale of a 160-unit community in Beaumont, Texas; Oak Grove Capital originates $59.5 million bond credit enhancement; and Marcus & Millichap sells a community in Washington, D.C., for $30.8 million.

Beaumont Trace Apartments

Beaumont, Texas—ARA has arranged the sale of Beaumont Trace Apartments, a 160-unit community located in Beaumont, Texas. The firm represented the seller, a New York-based private equity firm that invests in opportunistic real estate. A Midwestern firm affiliated with The Seldin Company and World Group purchased the asset for an undisclosed price.

“The buyer is a long-term investor and is optimistic about the future of southeast Texas,” says Jeff Patterson, a member of ARA’s Texas Secondary Markets team. “With the exception of one asset in Beaumont that is leasing up, every Class A asset in the region is now stabilized and there is no new multifamily development on the horizon.”

Beaumont Trace is a private, gated community located at 6105 North Major Drive. The asset was built in 2009 and has a mix of one-, two- and three-unit floor plans that average 982 feet. Community amenities include a pool with sundeck, clubhouse with café, fitness center, outdoor grilling area, private garages, carports, and pet-friendly grounds.

Oak Grove originates $59.5M bond credit enhancement for expiring Section 8 apts.

Chicago–Oak Grove Capital announced the origination of a $59.5 million Immediate Funding Fannie Mae NIBP Bond Credit Enhancement loan for the acquisition and renovation of Parkway Gardens by the Related Companies.

Parkway Gardens is an existing 694-unit affordable housing community on the Southside of Chicago that consists of 11 mid-rise buildings and 24 garden buildings.

“Since the property had a Section 8 contract that was set to expire and required extensive rehabilitation, we needed to craft a creative financing structure to ensure that this asset would be preserved,” says Tim Leonhard, managing director of affordable housing at Oak Grove Capital. “I am pleased we were able to find a solution that worked for all of the parties involved in this transaction.”

Utilizing a Fannie Mae NIBP Bond Credit Enhancement financing, Related Companies‑-which acquired the property through its Related Affordable division‑-plans to reinvest $55,000 per unit in renovation costs.

“The preservation of existing affordable housing is extremely important to Fannie Mae’s mission and business,” says Bob Simpson, vice president of Fannie Mae’s affordable multifamily mortgage business. “This transaction is particularly meaningful because it preserves and renovates hundreds of affordable family units that were at risk of being lost due to an expiring Section 8 Use Agreement. By combining various public and private resources such as NIBP Bonds, low income housing tax credits, federal historic tax credits, real estate tax incentives, and a new 20-year Section 8 contract, we were able to assure the continued viability of this important affordable housing asset for the next 30 years.”

As a result of Oak Grove Capital’s expertise in the affordable housing financing industry, the company was able to secure an immediate funding execution versus a more commonly offered forward commitment, which saved Related Affordable the time, complication, and costs associated with the involvement of a construction lender.

“Parkway Gardens is a very large undertaking and its financing success depended upon the involvement of nearly a dozen financing participants and regulatory agencies,” says Mark E. Carbone, president of Related Affordable. “Fannie Mae and Oak Grove Capital demonstrated tremendous creativity, responsiveness and flexibility in structuring an immediate funding credit enhancement that met our needs while mitigating the inherent risk in a transaction of this nature. We were very pleased with the outcome and look forward to our next opportunity to work with both Fannie Mae and Oak Grove Capital.”

Marcus & Millichap sells $30.8M community in D.C.

The Rittenhouse

Washington—Marcus & Millichap has brokered the sale of The Rittenhouse, a 204-unit, 211,579-square foot luxury apartment building in northwest Washington, D.C., for $30.8 million. The sales price represents $150,735 per unit. Ari Firoozabadi, a vice president in the firm’s D.C. office, represented the seller, Peter N.G. Schwartz Management Co. The buyer, Henderson Global Investors, was advised by local management partner the ROSS Cos.

“We received an outpouring of interest in The Rittenhouse from local, national and international investors,” says Firoozabadi. “However, the statutory restrictions of the Tenant Opportunity to Purchase Act, the District Opportunity to Purchase Act and rent control made growth forecasting and exit timing challenging. These D.C. residential regulatory restrictions made it difficult for the out-of-market investors to get comfortable with the asset.”

The Rittenhouse is a 9-story property located in a residential neighborhood atop a hill at 6101 16th St. NW. The high-rise community was developed by M. Pollin & Sons in 1957. Amenities include a 24-hour concerige, pool, fitness center, business suit, clubhouse, and game room.