Heritage Affordable Communities has acquired a portfolio of 11 LIHTC properties totaling 868 units in Tennessee. The firm has also established a property management and development office in Johnson City, Tenn., with its acquisition of DPKY Management Co., an affordable housing management and development firm headquartered in Johnson City.
DPKY Management Co.’s 26 employees will transition to Heritage, providing experience and local knowledge that will help Heritage efficiently manage and develop properties that cater to the needs of Tennessee’s residents.
The properties are located in Chattanooga, Johnson City, Sevierville, Kingsport, Clarksville, Maryville, Knoxville, Greeneville, Lenoir City, Rockwood and Erwin. Heritage purchased the LIHTC General Partnership Interests for $35.7 million, according to Affordable Housing Finance magazine. Greystone provided $16.5 million in Fannie Mae DUS financing for six properties. The Fannie Mae financing was originated by Dan Sacks, Ilan Bassali and Avi Kozlowski from Greystone’s New York office on behalf of Heritage Affordable Communities and Vitus Group. The six separate loans were for properties in eastern Tennessee and featured five-year terms with three years of yield maintenance and a maximum loan-to-value of 75 percent, according to Greystone. Heritage and Vitus also received a loan for another Tennessee property, Northgate Crossing Apartments, a 108-unit property in Hixson, Tenn., which was built in 2009.
The assets include:
- Deer Run Apartments, Rockwood, Tenn., a 72-unit property built in 2006.
- Oak Crest Apartments, Knoxville, Tenn., a 72-unit property built in 2007.
- Hidden Oaks Apartments, Greeneville, Tenn., a 72-unit property built in 2006.
- Town Creek Village Apartments, Lenoir City, Tenn., a 96-unit property built in 2010.
- Whispering Meadows, Erwin, Tenn., a 64-unit property built in 2003.
9 Percent LIHTC Program
The properties in the portfolio were originally developed under the LIHTC program through 9 percent tax credits between 2002 and 2020. Heritage secured various approvals from housing agencies, syndicators and lenders to complete the transaction. In addition to Tennessee, Heritage has properties in eight other states: New York, Indiana, Virginia, South Carolina, Alabama, Mississippi, Alabama and Texas. The firm owns and operates more than 3,500 units across more than 50 properties serving at least 10,000 residents.
Heritage has used various strategies to build its portfolio of affordable housing properties and acquire GP interests in LIHTC partnerships. These include normal fee simple acquisition of LIHTC 15-year deals and subsidized properties with Housing Assistance Payments contracts, with the goal of syndicating deals with 4 percent and 9 percent tax credits.
