ACQUISITION
A principal member of the team acquired a 142-unit Class-B garden style apartment community located approximately 5 miles from the entrance to I-85 and 1.9 miles from Gwinnett Medical Center, which is the first free-standing hospital for women in the Atlanta Metropolitan Area. The deal was awarded only after a previous buyer selected by the seller failed to perform, resulting in a purchase price 5% lower than the team’s initial offer. The Property was built under the Federal Low-Income Housing Tax Credit program (LIHTC) and is subject to a Land Use Restriction Agreement (LURA). In-place rental income is much lower than the rent cap imposed by HUD providing the opportunity to grow rents.

INVESTMENT PLAN
The plan was to convert the property to a market rental property by opting out of the LIHTC program, which requires executing a 3 step process, managed through the Georgia Department of Community Affairs (DCA). The executing team also planned to implement strategically focused capital improvements on the amenity package and units to elevate the property to the level of nearby competing conventional properties, which receive significantly higher rents.

RESULTS
During the initial two years of ownership, the executing team successfully opted out of the LIHTC program. Also completed were renovations to 26% of the units and upgrades to the club house, playground, landscape, and garbage compactor. In addition, the team changed the tenant mix from 100% LIHTC/Sec 8 to 38% market rate and 62% LIHTC/Sec 8, while also increasing the net operating income by 41%. Recent projections suggest that the tenant mix will be at 100% market rate within 18 months and NOI will continue its accelerated growth while enjoying an improving expense ratio.