Starwood Property Trust has secured $255.87 million in Freddie Mac financing for the acquisition of a 31-property, Low Income Housing Tax Credit (LIHTC) portfolio throughout Florida.
The agency loan was securitized by 19 of the portfolio’s assets and will be serviced by HFF through its Freddie Mac Program Plus Seller/Servicer program.
The trust purchased the portfolio from Wilson Company for $563.5 million.
The portfolio has heavy concentrations in Orlando and Tampa. The properties were developed between 1995 and 2004 under a government revenue code that allows developers to receive LIHTC tax credits to offset development costs.
In return, LIHTC properties have long-term rent and income restrictions. On average, maximum allowable rents across the portfolio are approximately $350 below typical rents in nearby market-rate communities, according to HFF.
Doug Childers, managing director on the investment sales team at HFF, said in prepared remarks that LIHTC transactions have attracted primarily private, regional capital providers traditionally, but that “this transaction represents the beginning of a new era for LIHTC investment sales.”
“HFF’s affordable housing experts were able to educate institutional investors regarding the portfolio’s relatively low cash-flow volatility and the regulatory and operational nuances associated with LIHTC communities,” he said. “As a result, we were able to create a competitive bidding process that included large, institutional investors.”
Earlier this month, Starwood announced that it is marketing a $1 billion debt fund that will invest in the B-pieces of commercial mortgage-backed securities, aiming to take advantage of impending risk retention rules that go into effect in December.
Starwood declined to comment. The Wilson Company is a property management and development firm based in Florida.