B/K Real Estate Funds, a national real estate advisory and investment firm, has acquired $100 million of tax-exempt, 501(c)(3) housing bonds related to the American Housing Foundation bankruptcy.
The Dallas-based firm acquired the bonds from an insurance company that was a lender in the initial bond transaction with the Foundation. Ron Beneke, a managing director of B/K Real Estate, would not name the insurance company.
“The bonds were not performing as a result of the bankruptcy and the financial chaos that was going on,” said Beneke in an interview with Affordable Housing Finance. “The properties were deteriorating. Part of our expertise is to rehabilitate properties and stabilize them.”
The Foundation had not been able to keep up with the bond payments, according to John Krieg, who is also a managing director at B/K Real Estate.
The firm intends to advance $12 million toward improvements at the nine properties involved in order to stabilize the developments. The communities, which have 2,034 affordable and market-rate apartments, are all in Texas.
The Foundation still owns the developments, but through the pending bankruptcy proceedings, the properties will likely be taken over by other nonprofit organizations, according to B/K Real Estate officials.
The bond acquisition is the latest chapter in the tragic story of Affordable Housing Foundation, which had amassed a portfolio of approximately 14,000 units.
Steve Sterquell, founder of the Amarillo-based nonprofit, drove his car into a bridge abutment in April 2009 in what has been ruled a suicide. The troubled firm soon filed for bankruptcy as creditors claimed being owed millions of dollars.