June 15, 2016 – Holliday Fenoglio Fowler, L.P. (HFF) announced today that it has closed the sale of and secured financing for a 31-property, Low Income Housing Tax Credit (LIHTC) portfolio totaling 8,498 units in various Florida locations.
HFF marketed the portfolio exclusively on behalf of The Wilson Company. Starwood Property Trust, an affiliate of Starwood Capital Group (Starwood), purchased the offering for $563.5 million. Additionally, HFF worked on behalf of the new owner to secure financing totaling $255.87 million through Freddie Mac’s (Federal Home Loan Mortgage Corporation) CME Program on 19 of the assets. The securitized loans will be serviced by HFF through its Freddie Mac Program Plus® Seller/Servicer program.
Heavily concentrated in Orlando and Tampa, the portfolio was developed between 1995 and 2004 under Section 42 of the Internal Revenue Code. Under this code, developers receive LIHTC to offset development costs. In return, LIHTC properties are encumbered with long-term rent and income restrictions. On average, maximum allowable rents across the portfolio are approximately $350 below prevailing rents at nearby market-rate communities. Tremendous demand for affordable housing across the portfolio contributed to an average portfolio occupancy exceeding 97 percent at the time of sale.
The HFF investment sales team was led by managing director Doug Childers along with senior managing director Jason Nettles and managing director Matt Mitchell.
HFF’s debt placement team was led by managing director Gregg Shapiro and executive managing director Jody Thornton.
“This transaction represents the beginning of a new era for LIHTC investment sales,” Childers said. “Traditionally, LIHTC transactions have attracted primarily private, regional capital providers. HFF’s affordable housing experts were able to educate institutional investors regarding the portfolio’s relatively low cash-flow volatility and the regulatory and operational nuances associated with LIHTC communities. As a result, we were able to create a competitive bidding process that included large, institutional investors.”
“Starwood emerged from the field by proposing an expedited closing process and demonstrating a thorough understanding of the opportunity,” added Nettles. “They performed flawlessly as though they had been investing in the LIHTC space for years.”
“In addition to The Wilson Company and Starwood’s performance throughout this process, Freddie Mac clearly demonstrated its commitment to affordable housing through its creativity and collaboration in order to provide attractive financing that supported Starwood’s acquisition of this portfolio,” said Shapiro. “The financing put the borrower in a position to not only achieve their targeted returns on its investment but also to continue to invest in these communities and ensure that they provide high-quality affordable housing long-term.”
“I became president of The Wilson Company in 2003,” said Carolyn Wilson, president of The Wilson Company. “It has been a rocky road for The Wilson Company employees, my family and me. My husband, Jack Wilson, would have been proud of what we have accomplished here. The sale of the portfolio is the culmination of ‘The House that Jack Built’.”
“Our thanks to HFF, who provided and engineered this opportunity, and to the talented Wilson Company team that managed and participated in this amazing transaction,” continued Wilson. “The Wilson Company continues in property management, managing the Franklin Exchange Building in downtown Tampa, which serves as the company’s headquarters, along with other commercial properties.”
[button href=”https://www.hfflp.com/media-center/press-releases/141772/hff-closes-563-5-million-sale-of-and-secures-255-87-million-financing-for-31-pr.aspx” style=”emboss” size=”medium” color=”#000000″ target=”_blank”]Source: HFF[/button]