South Florida LIHTC Property on the Block

By Dees Stribling, Contributing Editor

Miramar, Fla.—The Royal Castle Cos., the developer and owner of the Villas de Mallorca, a 252-unit apartment property in Miramar, Fla., has put the property on the market. As a Low Income Housing Tax Credit (LIHTC) project, the seller has retained specialized talent to facilitate the sale, Brenner Real Estate Group—a locally based firm—along with the Tax Credit Group of national investment specialist Marcus & Millichap.

The property, built in 2002, consists of 252 two- and three-bedroom apartments in sixteen three-story, garden-style buildings on 14 acres of land. Currently Villas de Mallorca is fully occupied.

Regarding the joint marketing arrangement with Marcus & Millichap, Brenner senior vice president Reese Stigliano explains that the tax credit affordable housing market is a highly specialized type of real estate investment. Among other considerations, there are federal and state compliance issues regarding resident income restrictions and rental rate caps unique to this type of development. The buyers of tax-credit, affordable housing projects tend to focus specifically on it.

Since its inception in 1986, LIHTC has spurred the production or rehabilitation of nearly 2.4 million affordable housing units nationwide. It’s virtually the only mechanism for getting affordable housing developed in the current economic climate.

South Florida is a particularly tight multifamily market, including both market-rate and affordable properties. According to Marcus & Millichap, vacancies market-wide dropped from 3.8 percent to 3.1 percent during 2012, and is heading lower this year. Only 900 new units were delivered to the market last year.