Affordable Housing Portfolio Acquisition in Arizona
The mission-rich financing secured for the sale, which falls under Freddie Mac’s affordable housing finance mandate, includes a 17-year loan term with a 40-year amortization at 86% loan-to-cost. The 97% occupied properties, which are covered by one bond allocation, include 50-unit Morningside Villa, 17802 North 19th Avenue in Phoenix; 60-unit Buckeye Villa, 300 South 9th Street in Buckeye; and 60-unit Tempe Villa, 3425 South Priest Drive in Tempe.
Upon the closing, the new owner plans to invest $7.9 million to renovate the three properties. Each property is covered by a long-term HAP contract that includes 100% of the units, converted to a new 20-year HAP contract at time of acquisition, along with the use of 4% Low Income Housing Tax Credits, yielding an anticipated 35% increase in rent collections. All of the units are restricted to 50% Area Median Income (AMI) for residents.