(January 23, 2015 – Arlington, VA) – Bucking the trend of apartment communities in the Washington region becoming less affordable, AHC Inc., a regional affordable housing developer, closed on eight multifamily transactions in 2014 with a total development value of $331 million and containing more than 1,400 units — pushing AHC’s total multifamily portfolio above 6,500 units.
“Not only is AHC broadening its reach in terms of the people we serve, but we are also working hard to create and implement innovative development strategies that go beyond traditional affordable housing financing tools to make us more nimble in today’s highly competitive marketplace,” said Walter D. Webdale, AHC President and CEO. “The reality is that the need for affordable housing continues to expand in our region for such disparate groups as senior citizens, working parents and recent college graduates. AHC’s goal is to leverage our 40 years of experience to create development opportunities and then execute those opportunities with the tools and resources that will get the job done.”
AHC’s 2014 projects include the acquisition of six existing rental communities containing 975 apartments, construction of 76 rental townhomes, and the redevelopment of an existing AHC-owned, 364-unit, historic property. The apartments are primarily located in the metro region’s high cost-of-living rental submarkets in Arlington, VA and Montgomery County, MD, along with developments in the District of Columbia and Baltimore. The properties provide homes for households with a variety of incomes, ranging from conventional affordability levels (50% and 60% maximum Area Median Incomes) to workforce housing (80% AMI) to full market-rate.
The projects utilized a variety of financing strategies, reflecting the challenges involved in assembling funding in the current marketplace. Several transactions were completed with innovative financing structures that relied heavily on market-rate tools and deal structuring techniques.
In Arlington, VA, for example, AHC partnered with such organizations as Freddie Mac, Arlington County and the Low-Income Investment Fund (LIIF) to create a financing structure that did not rely on the traditional affordable housing tools of Low Income Housing Tax Credits or tax-exempt bonds. The structure enabled AHC to move quickly in a competitive marketplace to successfully preserve two mixed-income properties with a total of 380 units near the gentrifying Columbia Pike area. And, in another non-traditional partnership, AHC joined with Housing Partnership Equity Trust (HPET), a social purpose real estate investment trust to acquire Woodleaf, a 228-unit apartment community in Silver Spring, MD.
AHC also made full use of existing affordable housing tools by pulling together funding from a variety of sources. For instance, AHC combined Low Income Tax Credits, tax-exempt bonds and Historic Tax Credits to finance the $110 million renovation of Woodbury Park, a 1940s historic garden-style community with 364 mixed-income apartments in Arlington, VA. The extensive financing package did not require local housing funds from Arlington County’s Affordable Housing Investment Fund (AHIF).
Along with more mixed-income projects, AHC’s 2014 developments also provide housing for a range of audiences, including a 55+ community in Silver Spring, a rental townhouse community for families in Baltimore’s southeast side, a Section 8 property in Baltimore City, and AHC’s first partnership in Washington, DC.
AHC’s 2014 projects included:
The Serrano, Arlington, VA, $63.4 million, 280 units, mixed-income housing. The Serrano, 280-units in two buildings on Columbia Pike, is one of the first large-scale projects in Arlington to focus on workforce housing – half of the apartments will be affordable to households earning 80% Area Median Income (AMI). Twenty percent of the units (56) will be affordable to 60% AMI. The remaining 30% (84) will be unrestricted, market-rate homes. The innovative financing strategy did not rely on the traditional affordable housing financing tools of Low Income Housing Tax Credits or tax-exempt bonds. Instead, the plan included a senior loan guaranteed by Freddie Mac through Walker and Dunlop, subordinate debt from Arlington County’s Affordable Housing Investment Fund (AHIF) and an equity investment comprised of AHC funds plus funds borrowed by AHC from the Low Income Investment Fund (LIIF).
The Spectrum, Arlington, VA, $22 million, 100 units, mixed-income housing. The Spectrum is a 100-unit high-rise apartment complex on Arlington’s western edge. The building is a market-rate property with all rents currently affordable to families earning 65% to 85% AMI. AHC intends to preserve 80 of the 100 units as committed affordable units for families earning 50% to 80% of AMI. The remaining 20 units will remain unrestricted to help support the affordable apartments. An innovative subordinate debt structure with Arlington County, similar to that used at the Serrano, replaced the traditional financing tools. Financing also includes a first trust debt guaranteed by Freddie Mac and AHC equity.
Woodleaf Apartments, Silver Spring, MD, $33.5 million, 228 units, workforce housing. AHC partnered with Housing Partnership Equity Trust (HPET), a social purpose real estate investment trust created by the Housing Partnership Network, to acquire Woodleaf Apartments. The 228-unit apartment community is comprised of one and two-bedroom apartment homes in the White Oak area of Silver Spring. AHC’s purchase of Woodleaf in collaboration with HPET, will preserve affordable units at the property. HPET is the first affordable housing REIT created and managed by nonprofits; AHC is one of 12 nonprofit housing developers in the collaborative. Woodleaf is HPET’s first acquisition in the Washington, DC metropolitan area.
Woodbury Park, Arlington, VA, $110 million, 364 units, mixed-income. AHC has begun a wholesale redevelopment of Woodbury Park, a 1940s garden-style apartment community within ½ mile of two Metro Stations, multiple bus routes and a broad mix of retail options. The restoration of the property, which is listed on the National Register of Historic Places, includes new major building systems, fixtures, appliances and finishes. The property includes a mix of 204 income- restricted units and 160 market-rate apartments. Financing includes privately placed tax-exempt bonds issued by Arlington County Industrial Development Authority, Low-Income Housing Tax Credit equity and federal and state Historic Tax Credits. The financing package did not require local housing funds from Arlington County’s Affordable Housing Investment Fund (AHIF).
Key’s Pointe, Baltimore MD, $20.8 million, 76 rental townhomes, mixed-income. AHC Greater Baltimore completed the first phase, 76 rental townhomes, of a massive revitalization of a 62-acre, 1940s public housing community on Baltimore’s southeast side. Half of the units are deeply affordable using a Project-Based Section 8 contract with 27 reserved for current and former public housing families. The remaining units are affordable to families earning up to 50% of AMI. The homes are the first new development in the Southeast Baltimore neighborhood for many years. Partners in the project include The Michaels Development Company and the Housing Authority of Baltimore (HABC). Financing includes 9% Low-Income Housing Tax Credit equity, Rental Housing Funds from the State of Maryland and a long-term ground lease from HABC. The multi-phase project will ultimately create a mixed-income community with a blend of more than 900 rental and homeownership opportunities.
Charter House, Silver Spring, MD, $19.7 million, 212 units, mixed-income senior housing. Charter House is an age-restricted (55+), income-restricted apartment community in downtown Silver Spring within walking distance of the Silver Spring Metro Station. The property is financed with tax-exempt bonds and subordinated debt from the Montgomery County Department of Housing and Community Affairs. The property includes a mix of incomes: 20% of the apartments are restricted to households earning up to 50% AMI, 55% of the units are for households earning up to 80% AMI and 25% of the apartments are unrestricted.
Madera Apartments, Baltimore, MD, $9 million, 47 units, 100% Project-Based Section 8 Housing. Madera is a 47-unit community with 13 one-bedroom and 34 two-bedroom apartments in Baltimore’s Park Heights neighborhood. An extensive rehabilitation is slated for 2015, including adding central air conditioning, new windows and doors, roof replacement, new wheelchair accessible units, Energy Star lighting and kitchen appliances. Financing included FHA insured mortgage, 4% Low-Income Tax Credit tax exempt bonds and funding from the Low-Income Investment Fund (LIIF).
Lincoln Westmoreland, Washington, DC, $53 million, 108-unit renovation and 56 new units, affordable. AHC is partnering with Lincoln Westmoreland, a nonprofit affordable housing developer, to renovate its existing 108-unit high-rise building and construct a 56-unit affordable building on under-utilized adjacent land. The projects will be financed with a combination of tax-exempt bonds, 4% Low-Income Tax Credit equity, owner equity and District of Columbia grants and subsidized loan. The project is AHC’s first partnership in Washington, DC. The development plan involves using a portion of the land of the 108-unit property to construct a new eight-story building with 56 apartments and ground-floor retail. Both properties will be 100% affordable at less than 60% Area Median Income.
Founded in 1975, AHC Inc. is a nonprofit developer of affordable housing in the mid-Atlantic region that provides quality homes and education programs for low- and moderate-income families. Based in Arlington, VA, AHC has developed more than 6,500 apartment units in 49 properties in Virginia and Maryland. AHC’s Resident Services program reaches 2,000 children, teens, adults and seniors each year through onsite education programs and activities.