Equity Resource Investments invested $30 million of equity to recapitalize an 8,907-unit portfolio of GP interests with a total Portfolio Value of $53.85M. The Portfolio includes interests in 204 multifamily properties (47 LIHTC and 157 USDA), all located in the southeastern United States. The LIHTC portfolio is highly concentrated in high growth markets and the USDA portfolio consists of smaller, older and more rural properties. The sponsor and seller is one of the largest affordable housing owners and operators in the southeast and has an active pipeline of future portfolio acquisitions. As part of this transaction, ERI arranged acquisition financing secured by the GP cash flows. The terms of the debt are for 40% leverage, an initial fixed rate of 4.33%, 10-year maturity and 20-year amortization schedule.
The opportunity came to ERI through an existing relationship with both the Sponsor and the investment bank who understood ERI’s expertise in the affordable housing space. Despite being a marketed opportunity, the limited pool of buyers who understood both the LIHTC and USDA program allowed ERI to transact at a purchase price well below our internal valuation of the portfolio.
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