Boomtowns Need More Affordable Housing
But it's very difficult to get conventional financing to acquire and improve multifamily properties in need of significant rehab.
CINCINNATI—Rapid economic growth in this region has not fulfilled the need for affordable housing. But Columbia Pacific Advisors, LLC, through its bridge lending platform, has provided Blue Tide Partners with $25 million in short-term first mortgage debt primarily for the acquisition of a nine-property, 435-unit value-add multifamily portfolio in Cincinnati, OH.
Blue Tide Partners, a Covington, KY-based value-add real estate investment firm founded by Tom Miller and Doug Pelfrey, acquires and renovates older multifamily product to create comfortable and affordable rental housing largely for low- to middle-income families in the Greater Cincinnati/Northern KY market.
“Despite the very clear need in the marketplace, it is very difficult to get conventional financing to acquire and improve multifamily properties in need of significant rehab, which will help address the problem,” says Miller. “Columbia Pacific Advisors understood the asset class, the need in the market and were confident in our ability to meet the challenges.”
According to a study published in 2017 by Xavier University and the Local Initiatives Support Corp. of Greater Cincinnati & Northern Kentucky, the region suffers from a shortfall of 40,000 affordable housing units.
Blue Tide will also use a portion of the loan to refinance existing debt on nine similar properties totaling 212 units in Cincinnati, which the firm acquired in 2014 and 2015. Columbia Pacific Advisors’ financing package also includes a multimillion dollar reserve to help pay for capital improvements across the entire portfolio, according to Billy Meyer, managing director of real estate lending for Columbia Pacific Advisors.
“This was a complex financing that involved underwriting a combination of performing and non-performing assets from multiple sellers,” says Meyer. “The sponsor also needed a meaningful cap ex budget in order to stabilize the portfolio and find long term debt. Blue Tide has successfully executed this strategy in the greater Cincinnati area for more than a decade. It was this vast experience with their business model and intimacy with the submarket that helped us feel comfortable with how their business plan fit the demand in the market.”
Blue Tide has set a goal of providing 2,500 units over the next five years that meet the demand for comfortable, clean and livable rental housing for families in transition.
“We would not expect someone to live in an apartment that we would not live in ourselves,” says Miller.
The properties in the 18-property portfolio range in size from five to 106 units and are collectively 55% occupied.