The strong investor appetite for multifamily product is what drove Lawler Wood to sell the assets, says the locally based firm's president, Phillip O. Lawson. The company has been active in the affordable housing sector for more than 30 years, he says. "We had built up our portfolio pretty substantially and we felt like selling off part of our properties would allow us to bring some more capital into the business," he explains. "We'd also become aware of the activity in the sales of general partnership interests in tax credit deals and were in fact approached by several people about that."

While the firm considered bringing the portfolio to the general investor community, in the end it decided not to market the properties for sale. Eagle Point Enterprises was one of two potential buyers that were in the running, Lawson says. While the purchase price is confidential, he adds, "we got what we felt was a very adequate price."

The communities were all done under the 4% low-income housing tax credit program and take part in the project-based Section 8 program. They are at near-full occupancy and recently underwent significant rehabilitations, so there's no need for the buyer to invest additional capital into the assets, says Lawson, adding that Lawler Wood had held the properties for between two and six years.

The main attraction for a buyer, he relates, is the revenue stream from the communities. "They're really buying stable cash flow," he explains. "I also think the stability of the tax credit program has created interest in this because people know that at the end of the 15-year compliance period, there will be another opportunity for a re-syndication and another rehab."

[IMGCAP(2)] Two-thirds of the communities involved in the sale are in Tennessee: the 268-unit Morningside Gardens, 278-unit Summit Towers and 240-unit Westview Tower in Knoxville; the 153-unit Dandridge Towers and 90-unit Hickory Forest in Nashville; 213-unit Ada Ferrell/East Gate in Tullahoma; 427-unit Chippington I & II in Madison; 175-unit Maple Oak in Kingsport; 296-unit Memphis Towers in Memphis; 112-unit Ramblewood Apartments in Clarksville; the 102-unit Watauga Square in Johnson City; 149-unit Clinton Towers in Clinton; and the 80-unit Lincoln Manor Apartments in Morristown.

The balance of the portfolio consists of the 251-unit Bankhead Towers in Birmingham, AL; 271-unit Carbondale Towers in Carbondale, IL; 110-unit North Park Apartments in Bossier City, LA; 99-unit Lake Road Apartments in High Point, NC; 240-unit Hillwood II Apartments in Akron, OH; and the 88-unit Spanish Trace Apartments in Beaufort and the Towers East Apartments in Greenville, SC.

Lawson states that Eagle Point has indicated it does not intend to make any changes in staffing at any of the properties, and plans to offer employment to on-site employees.

After the deal, Lawler Wood's holdings will consist of 17 affordable and four conventional communities, about 75% of which will be in Tennessee. The proceeds of the sale will be reinvested into the company, says Lawson. "We've outgrown some of our internal structures and systems, and this gives us a chance to restructure them," he says.

Also in the plans are additional acquisitions. "We're not slowing down at all in terms of our acquisition plans," he says. "We intend to continue to acquire, rehab, manage and own both affordable and conventional apartment properties. We're continuing to have a very strong acquisition program and in fact, this year is shaping up to be a very good one for us. In 2006, we acquired around 13 properties. Last year, we maybe only acquired four affordable and three market rate. But this year, we're really coming out gangbusters, so I would expect to have a really good year."

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