Hunt Cos., Inc., has increased its affordable housing stake by acquiring the Capmark Financial Group portfolio in a bankruptcy auction.
The approximately $102.4 million transaction involves the upper-tier low-income housing tax credit (LIHTC) partnership interests and related assets associated with more than 45,000 units of affordable to moderate-income housing at 287 properties across the nation.
Capmark filed for bankruptcy protection in 2009. Its subsidiary, Paramount Financial Group, was a longtime LIHTC syndicator and had originally syndicated the tax credits on the properties. The vast majority featured guaranteed funds. As a result, Capmark held interests and asset management responsibilities in a large number of affordable housing properties.
As part of the terms of the bankruptcy agreement, the transaction will be staged, and it is anticipated that subsequent purchases would be completed, which would add an additional 18,000 units at 121 properties to the portfolio.
“This transaction represents a unique and strategic opportunity for Hunt,” said Hunt Chairman and CEO Woody Hunt in a statement. “This complementary acquisition enhances our real estate portfolio and will help us secure a leading position in the affordable housing market. We are pleased to welcome the experienced Capmark team to our company.”
The deal provides the company with interest in a substantial number of properties and units as well as new asset management opportunities, according to Alan Fair, president of Hunt Capital Partners, LLC.
There’s no change in the lower-tier ownership at the properties, and it will be seamless for the developers and owners, he said.
In a LIHTC fund structure, syndicators and investors are considered upper-tier partners. Developers are usually known as lower-tier partners.
Bear Creek Multi-Family Investments had agreed to buy some of the assets, but Capmark received court approval to hold an auction to see if it could get a better bid. Hunt then came in with its offer.
The purchase is notable because it demonstrates Hunt’s growing presence in the affordable housing sector. The deal comes on the heels of the company, which has long been active in market-rate and military housing, forming Hunt Capital Partners to focus on LIHTC syndication and placement.
“It shows the company’s commitment to the affordable housing industry,” Fair said.
The portfolio will be managed by a team in Denver comprised of former Capmark employees and Hunt Capital employees along with Hunt support services employees in Los Angeles, Chicago, Washington, D.C., and El Paso, Texas.
Founded in 1947, Hunt Cos. has become a leading national privately-owned real estate investor, manager, developer, and contractor. Hunt’s focus and experience is in sectors such as public-private partnerships, military housing, mixed-use, multi-family housing, master-planned communities, government build-to-lease programs, retail, and office. Hunt provides investment management, development, construction, and asset and property management services.
Hunt and its affiliates have $10 billion of assets under management. These assets include 66,000 multifamily housing units, 4.7 million square feet of commercial, 1.5 million square feet of industrial, and 2.1 million square feet of retail.