News - 2006
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2006-025
Red Capital Syndicates $10.9 Million in LIHTC and Arranges For $23.5 Million Tax-Exempt Bond Financing
IRP’s Decoupled for Properties Acquired in Ohio Portfolio
Columbus, OH, June 12, 2006 – Red Capital Markets, Inc. (MEMBER FINRA/SIPC), the investment banking arm of comprehensive capital provider RED CAPITAL GROUP, recently syndicated $10.9 million in low income housing tax credits ("LIHTC") and advised on the structuring of $23.6 million in tax-exempt bonds, in order to finance the acquisition and rehabilitation of six multifamily properties located in various Ohio communities ("Portfolio").
The purchased assets consisted of nine individual properties that were originally financed under the HUD 236 program. The assets were consolidated into six properties, and the original HUD 236 financing was repaid. The new financing was raised by a direct purchase of tax-exempt bonds, which were cross-collateralized/cross-defaulted across the pool of properties, and are partly supported by eight IRP streams that were decoupled from the repaid 236 loans.
The Portfolio primarily consists of properties that were originally constructed in the 1970’s and unit amenities include range/oven, refrigerator, air-conditioning. Each property is supported by a project-based Housing Assistance Payments contract ("HAP"), which provides rental subsidy for 573 of the 767 units in the Portfolio. The LIHTC units are restricted for occupancy by families earning 60% of area median income or less.
The project developer, Midwest Real Estate Services, LLC ("MRES") was formed in 2005, and is jointly owned by five individuals who have over 100 years combined experience in the real estate industry. Thomas Lusk, Principal of MRES said, "The team at Red Capital was a perfect choice for our transaction. They understood every aspect of this very complicated structure and acted as a true partner through-out the entire process."
David C. Martin, Senior Managing Director of Red Capital Markets, Inc. said, " I enjoyed working with the talented team at MRES. Given the complexity of this transaction, I was pleased how RED and MRES worked together to close this portfolio and overcome the structuring challenges."
