Multifamily Affordable Housing Market Commentary
Preservation Database Helps Identify Subsidized Affordable Transactions
The advent of the National Low Income Housing Coalition Preservation Database has facilitated for new types of analysis
on subsidized affordable properties. For instance, by matching the Preservation Database to the Real Capital Analytics
(RCA) database of multifamily transactions, sales of properties with subsidies may be more fully identified. In addition,
apartment sales may be broken down into various subsidy types at the time of sale.
Confirmed Sales Totaled at Least $5.4 Billion in 2014
As shown in the chart below, confirmed sales of subsidized affordable apartment properties valued at $2.5 million or greater
totaled at least $5.4 billion in 2014, more than double the confirmed sales of $2.6 billion in 2013. Approximately half of the
sales volume involved properties with active Low Income Housing Tax Credit (LIHTC) subsidies and a little over $1 billion
on properties with active Department of Housing and Urban Development (HUD) Section 8 housing subsidies. In some
instances, properties may have both LIHTC and Section 8 subsidies to keep rents affordable. Interestingly, the price per
unit on reported subsidized affordable sales remained steady over the past few years at approximately $80,000.
90,000
$300
80,000
70,000
$250
60,000
$200
50,000
$150
40,000
30,000
$100
20,000
$50
Units/Price Per Unit
Sales Price (Billions)
Subsidized Affordable Apartment Sales Volume
$350
10,000
$0
0
2008
2009
Number of Sales
2010
2011
2012
Units
2013
2014
Price Per Unit (PPU)
Section 8 Affordable Apartment Sales Volume
Large Deal in 2014 Involves Low Income Seniors
One of the largest deals involving a property with an active
section 8 subsidy in 2014 was the Quincy Point Homes (I-III)
property purchased by the Quincy Point Congregational
Church in December 2014 for about $71 million. Quincy Point
also has a Section 202 direct loan for approximately $930
million and is restricted to seniors aged 62 and over. The 640
rent restricted apartment units were built in 1964 and were
purchased with the intent to be renovated.
Copyright© 2015 Fannie Mae
$1,400
$1,200
(Millions)
Properties with Section 8 Subsidies
From 2012 to 2014, confirmed sales of properties with Section
8 subsidies totaled at least one $1 billion annually, as seen in
the chart to the right.
$1,000
$800
$600
$400
$200
$0
Source: Real Capital Analytics, National Low Income Housing
Preservation Database, Fannie Mae
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Active Purchasers of Section 8 Properties 2008 - 2015
Buyers Active over Multiple Years
Several buyers have been active in multiple years since
2008. For example, as seen in the chart to the right, GHC
Housing Partners, Global Ministries Fellowship, Omni NY
and Preservation Partners Management Group are just a
few of the most active buyers that have purchased
properties with Section 8 subsidies in at least three out of
the last seven years.
Affordable Housing Sector Attracts All Types of
Investors
One notable entrant into the subsidized affordable
housing investment market is former professional
baseball player Mo Vaughn. Mr. Vaughn was the first
baseman for the Boston Red Sox from 1991 to 1998. In
his post-baseball career, Mr. Vaughn started Omni New
York, LLC, which is dedicated to rebuilding severely
deteriorated low income housing.
While most of Omni New York’s renovations have been
in the New York metro area, recent activity has moved
south, including acquisitions in South Carolina. In April
2015, Omni New York closed deals on three apartment
properties in South Carolina: Crescent Hill in
Spartanburg with 150 rent restricted units; Spring Grove
in Taylors with 103 rent restricted units; and Boulder
Creek in Greenville where all 200 units are rent restricted.
The latter two apartment properties also financed
renovations from an infusion of tax credits. In all three
properties, renters pay no more than 30% of income for
rent, leaving more of their income for other necessities.
Source: Real Capital Analytics, National Low Income Housing
Preservation Database, Fannie Mae
Buyer Pool Larger for LIHTC Properties
It appears that there are many more buyers participating in the LIHTC property sector than there are in the Section 8 housing
sector. While it is difficult to exactly identify who is purchasing which multifamily properties, according to data from RCA,
since 2008 there are 568 companies that purchased properties with active LIHTC subsidies, compared to just 274
companies purchasing properties with Section 8 subsidies.
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One of the Largest Multifamily Affordable Sales in 2014 was in New York City
In 2014, Clipper Equity purchased the RiverWatch property located in Battery Park City in Manhattan for approximately $73
million, making it among the largest single sales of properties with active LIHTC subsidies last year. The property has both
LIHTC and NYC Housing Finance Agency 80/20 subsidies.* According to the National Low Income Housing Preservation
Database, the property has 43 units subject to rent restrictions out of a total of 209 units.
This transaction illustrates the headwinds faced in preserving affordable housing. According to the Preservation database,
rent restrictions should remain in place on the affordable units through the end of 2029. However, a 750 square foot one
bedroom market rate unit at the same complex was recently listed on the site Apartments.Com for $3,700. Given the
traditional measure of affordability that a renter should pay no more than 30% of income for rent and utilities, this apartment
would only be affordable to those earning $148,000 per year! With such rents, developers have little incentive to maintain
affordability after subsidies expire.
Other Locations See Activity
In 2014, Aspen Square Partners purchased a portfolio of four properties located in Arizona and Florida for a total purchase
price of just under $50 million. The properties in Tallahassee were the Bainbridge with a total of 183 units subject to rent
restrictions and 1800 Oasis (formerly Banyan Bay) with 279 rent restricted units. The properties in Arizona were Casa de
Colinas in Tucson with 129 affordable units and the Village at Cottage Park in Surprise with 179 affordable units. As seen
in the chart below, in addition to Aspen Square Management, CAPREIT, Korda Construction, Peak Capital Partners and
the Reliant Group have been active purchasers of LIHTC properties over the past few years.
Active Purchasers of LIHTC Properties 2008 - 2015
Source: Real Capital Analytics, National Low Income Housing Preservation Database, Fannie Mae
* According to the New York University Furman Center, “…the 80/20 Housing Program, the New York City HFA offers tax-exempt financing to multi-family
rental developments in which at least 20 percent of the units are set aside for very low-income residents, using funds raised through the sale of bonds. At
least 20 percent of the units must be set aside for households with incomes at 50 percent or less of the local AMI, adjusted for family size. Alternatively,
25 percent or more of a project’s units must be affordable to households whose income is 60 percent or less than the local AMI, adjusted for family size.
Twenty percent of a project’s units must remain affordable to very low-income households for a given time period agreed upon between HFA and the
building owner. The very low-income requirement is usually contained in a Regulatory Agreement that dictates that the maximum rent on these affordable
units cannot exceed 30 percent of the applicable income limits. The remaining units can be rented at market rates. The credits can be syndicated to
generate equity for the project.”
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2015 Off to a Promising Start
According to Real Capital Analytics, sales of subsidized affordable multifamily properties totaled slightly under $1.5 billion
this year through May 2015, with an average price per unit of $82,000. As shown in the chart below, there were several
notable sales on properties in the $10 million to $25 million dollar range. One of the larger properties purchased earlier this
year includes the 200-unit ECHAD apartments in Dallas, which sold for $11.5 million. This is a low income seniors housing
property, relying on both Section 8 and Section 202 seniors housing subsidies.
2015 Notable Sales Transactions ($10 Million - $25 Million)
Subsidized Properties In Need of Renovations
Most of the subsidized apartment properties purchased since 2008 are older. Indeed, the median year is 1984 for properties
with active LIHTC subsidies at purchase and 1975 for properties with Section 8 subsidies. As a result, many properties with
these existing subsidies most likely require at least some upgrades, if not a full renovation, and that can be costly.
Recognizing this need, HUD and the GSEs have all introduced changes to moderate rehabilitation products to improve
execution for in-place rehabilitation. These enhancements should encourage better preservation of this important source of
affordable housing.
Tanya Zahalak
Real Estate Economist
Multifamily Economics and Market Research
August 2015
Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Multifamily Economics and Market Research Group (MRG) included in these
materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are
subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the MRG bases its opinions, analyses,
estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate,
current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different
results. The analyses, opinions, estimates, forecasts and other views published by the MRG represent the views of that group as of the date indicated and
do not necessarily represent the views of Fannie Mae or its management.
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