Last week, Los Angeles-based fund manager American South Capital Partners provided Atlanta-based alternative investment manager Infinity Real Estate Partners with an $18.75 million investment to purchase a 1,068-unit affordable housing portfolio with assets located in North Carolina and South Carolina, according to a press release.
A vast majority of the units in the portfolio — 95% — are governed by HUD’s Housing Assistance Program. The seven properties, built between 1968 and 1973 and ranging in size from 81 to 200 units, include:
• Boulder Creek in Greenville, South Carolina.
• Crescent Hill Apartments in Spartanburg, South Carolina.
• Roosevelt Gardens in Orangeburg, South Carolina.
• Spring Grove Apartments in Taylors, South Carolina.
• Cedar Moor Apartments in Raleigh, North Carolina.
• Timber Ridge in Charlotte, North Carolina.
• Brentwood Crossing in High Point, North Carolina.
Infinity will use a portion of American South’s investment to fund interior and exterior improvements across the portfolio, including new appliances, cabinets and flooring, while keeping residents in place. It will also address deferred maintenance by repairing or replacing roofs, air conditioning and plumbing as needed.
“Our sponsor that we're working with, Infinity, has an incredible track record in this space,” Tyler Epps, senior vice president of originations for American South Capital Partners, told Multifamily Dive. “They own over 5,000 Section 8 units across the country. They have a very strong business plan for how they operate these. They work with best-in-class property management companies.”
Once the renovation project is complete, 100% of the units will be affordable to individuals and families earning 60% or less of the area median income, which will qualify the investment for 100% of the Community Reinvestment Act Credit. Through partner Mercy Housing, each property will have a dedicated community coordinator who works with local organizations to provide supplemental services like after-school care, financial literacy and resume services for tenants.
“In North and South Carolina, they've got the great property tax abatement programs where you can partner with a nonprofit, bring on-site services, childcare and other community-type services,” Epps said. “You actually get a property tax abatement for your investment. That is a huge win when you're trying to invest in projects where your rent numbers are capped.”
More buying opportunities
ASCP invests in affordable housing real estate projects in 10 southern states. Its funds have committed more than $176 million to 26 projects, financing more than 7,025 housing units — 82% of which are affordable to families with incomes less than 80% of the AMI.
The firm has seen an opportunity to make acquisitions as others moved away from the market.
“As interest rates have continued to rise, a lot of equity groups, like our competitors, have been on the sidelines,” Epps said. “We've been looking at it as a good opportunity to buy over the last 12 months, but I think we're at a critical time.”
Epps thinks lenders may finally stop extending loans in 2025, forcing sponsors to refinance or sell.
“We're looking at that as an opportunity, whether that is to recap some of these existing deals with existing sponsors who have a strong track record or work with groups like Infinity, who have the capital to go in and acquire these projects, renovate the units and bring them up to the highest quality standards in the marketplace,” Epps said.
Those opportunities could be especially plentiful in the affordable arena.
“For groups like us — for-profit, private equity groups that are focused on affordable housing — I do think there will be more opportunities with Section 8 deals and even Low-Income Housing Tax Credit deals that are outside of their initial compliance period,” Epps said.
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