Related Cos. announced it is acquiring 3,062 affordable housing units across the Midwest and in Florida. The firm is also purchasing Metroplex, an affordable property management company based in Illinois.
Related has agreed to buy the properties for nearly $270 million from groups led by Sheldon Baskin, a Chicago-based investor in affordable housing.
The portfolio acquisition by Related divisions—Related Affordable and Related Midwest—involves more than 1,500 units in Chicago.
Through a public-private partnership with the city of Chicago and Illinois Housing Development Authority (IHDA), affordability of the units will be preserved for an additional 30 years, and more than $262 million will be invested in the rehabilitation of the properties. The units are in 17 properties.
Related will lead a multi-year effort to update all seven buildings in Chicago as well as an additional 605 units throughout Illinois, 404 units in Florida, 248 units in Iowa, and 280 units in Minnesota.
One of the most notable properties is the 628-unit Marshall Field Garden Apartments in Chicago, which was due to lose its affordable designation in 2017. The transaction will preserve the property’s affordability for three more decades.
“Related has preserved more than 35,000 affordable housing units, and we have never converted a single unit to market rate,” said Matthew K. Finkle, president of Related Affordable. “Through public-private partnerships like this, we will be able to significantly improve the lives of the residents who call these communities home, and ensure that thousands of residences in the city of Chicago and the Midwest will remain accessible to the families and individuals who need them most. We look forward to continuing to work with the local and state governments to expand our preservation efforts.”
Marshall Field Garden Apartments, which spans two blocks in the Old Town neighborhood, will be one of the first properties to be redeveloped.
Upgrades are scheduled to begin in July. The $175 million project is being financed by IHDA and includes both low-income and historic preservation tax credits. Extensive renovations planned for the individual units and common areas include the construction of a new fitness center, a laundry room, and an enhanced community room, as well as the addition of after-school programming and other services available to residents.
The property received $102 million in conduit bond financing from IHDA, which also allocated the housing tax credits that were purchased by Wells Fargo. Fannie Mae provided credit enhancements for the bonds via Wells Fargo as a DUS lender.
“IHDA’s investment in Marshall Field Gardens provides a tremendous boost to the Old Town neighborhood, preserving much-needed affordable housing for working families in the heart of Chicago,” said Mary R. Kenney, IHDA executive director, in a statement.
“The preservation of Marshall Field Gardens by Related Affordable will ensure housing opportunity in the Near North Side community for decades,” added Antonio R. Riley, Midwest regional administrator for the Department of Housing and Urban Development. “Marshall Field Gardens will be maintained as high-quality, affordable housing for many longtime residents in this community of opportunity. Residents will continue to benefit from access to excellent transportation and jobs, in addition to training and employment opportunities that will empower residents and serve as a catalyst for change.”
Alan Wiener, managing director of Wells Fargo Multifamily Capital, calls the acquisition “one of the largest public-private affordable preservation transactions in decades.”
Related is also taking over Metroplex, a firm with 200 employees and a management portfolio of 4,749 units in Florida, Illinois, Iowa, and Minnesota. Related Management has nearly 2,000 employees and manages more than 45,000 apartments across the country.
In addition to these portfolio acquisitions, Related has acquired 3,196 units over the past 24 months and expects to close on an additional 1,027 affordable units later this year.