SACRAMENTO, CA – Pembrook Capital Management announced the acquisition of $11.4 million of debt on two California affordable housing complexes totaling 571 units, as the first step in a series of transactions that will result in the preservation of these properties as affordable housing. 

In tandem with the acquisition of the debt on two apartment properties, Pembrook has executed a forbearance agreement with the borrower which will provide them the necessary time for the re-syndication of both properties under the Low Income Housing Tax Credit (LIHTC) program and completion of capital improvements estimated at over $9M.

“We’re proud to deliver a creative financing solution that we believe will help the property ownership maintain affordability of nearly 600 apartment units,” said Stuart J. Boesky, CEO of Pembrook.  “Home affordability is a major issue across the United States, and Pembrook has a continued focus on delivering flexible, creative financing for affordable housing owners and developers.  With support from our partners at Rabobank, N.A, an organization that shares our strong commitment to affordable housing, we were able to provide a perfect solution.  By combining a loan acquisition and forbearance, we will allow two projects at the end of their tax credit compliance periods to work through a restructuring and recapitalization that will keep the apartments affordable and operating well into the future.”

Boesky added: “My team has deep experience in the affordable housing space and can quickly assess and do on solutions for developers and owners trying to recapitalize Low Income Housing Tax Credit properties at the end of compliance period, and those seeking to buy and rehabilitate these properties.  We find that our skill set is critical for developers and owners now that the Tax Credit market is feeling the effects of uncertainty associated with proposed tax reform.”

The properties are located in Sacramento and Los Angeles.  One property is a 386-unit affordable housing complex built in 1972 and offering a combination of high rise (306 units) and garden (82 units) apartments.  The additional property is a 185-unit affordable housing complex built in 1950.  Both properties have performed well historically, with occupancy consistently around 99%.

In addition to the transaction announced today, earlier this month Pembrook closed a $7.57 million first mortgage loan to complete the development of Alondra Villas, a 29-unit townhouse development located at 950 West Alondra Boulevard, in Compton, CA.  Neighborhood Housing Services of Los Angeles County (NHS) bought the partially completed project approximately 18 months ago from the City of Compton.  The Pembrook loan will allow NHS to complete the construction of the project over the next nine months and sell the units to low and medium income (LMI) buyers.

Pembrook is a real estate investment manager that provides financing throughout the capital structure.  The firm has originated or participated in investments totaling over $1 billion since it started investing in 2007.

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IRVINE, CA – CoreLogic, a leading global property information, analytics and data-enabled solutions provider, released its CoreLogic Home Price Index and HPI Forecast for March 2017, which shows home prices are up both year over year and month over month.

Home prices nationwide, including distressed sales, increased year over year by 7.1 percent in March 2017 compared with March 2016 and increased month over month by 1.6 percent in March 2017 compared with February 2017, according to the CoreLogic HPI.

The CoreLogic HPI Forecast indicates that home prices will increase by 4.9 percent on a year-over-year basis from March 2017 to March 2018, and on a month-over-month basis home prices are expected to increase by 0.6 percent from March 2017 to April 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“Home prices posted strong gains in March 2017, and the CoreLogic Home Price Index is only 2.8 percent from its 2006 peak,” said Dr. Frank Nothaft, chief economist for CoreLogic. “With a forecasted increase of nearly 5 percent over the next 12 months, the index is expected to reach the previous peak during the second half of this year. Prices in more than half the country have already surpassed their previous peaks, and nearly 20 percent of metropolitan areas are now at their price peaks. Nationally, price growth has gradually accelerated over the past half-year, while rent growth for single-family rental homes has slowly decelerated over the same period, according to the CoreLogic Single-Family Rental Index, recording a 3 percent rise over the year through March.”

“A potent mix of strong job gains, household formation, population growth and still-attractive mortgage rates in the face of tight inventories are fueling a continuing surge in home prices across the U.S.,” said Frank Martell, president and CEO of CoreLogic. “Price gains were broad-based with 90 percent of metropolitan areas posting year-over-year gains. Major metropolitan areas were especially hot with CoreLogic data indicating that four of the largest 10 markets are now overvalued. Geographically, gains were strongest in the West with Washington showing the highest appreciation at nearly 13 percent, and Seattle, Tacoma and Bellingham posting gains of 13 to 14 percent.”

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IRVINE, CA – SARES REGIS Multifamily Value-Add Fund II bought four rental communities totaling 1,094 apartments in Washington, Colorado and Arizona in the fourth quarter of 2016, following a strong third quarter of acquisitions with buy of three communities totaling 812 units. 

The fund, which has $304.2 million in equity commitments, has bought a total of nine communities since 2015.

“With 2,351 apartments under management in Fund II and approximately two thirds of the fund’s equity invested, we’re in a fantastic position to selectively fill out the balance of the portfolio in 2017,” said Bill Montgomery, chief investment officer of the SARES REGIS Multifamily Fund.  “The fund’s equity commitments can be leveraged to buy approximately $850 million in assets,” he said.

“The fund’s objective is to capitalize on the attractive multifamily fundamentals in some of the best western U.S. sub-markets while maximizing the potential to add value through renovation and repositioning of well-located Class-B properties by leveraging SRG’s vertical operating capabilities,” Montgomery said.  “With rents at newer Class A properties at historically high levels in many markets, the ability to offer a value alternative with a quality product is compelling to many renters,” he added. 

The fourth quarter acquisitions were: Solara (238 units) in Seattle, Washington, Regatta (232 units) in Northglen, Colorado, Alanza Place (360 units) in Phoenix, Arizona, and Salado Springs (144 units) in Tempe, Arizona.

Previously, nine communities totaling 1,377 apartments were bought with $114 million in SARES REGIS Multifamily Fund I in 2013.

Both funds are sponsored by SARES REGIS Group, a privately held firm that is nationally recognized for its acquisitions, development and management of apartments, condominiums, mixed-use communities, office and industrial buildings in the western U.S. The company manages a combined portfolio of approximately 17,300 apartment units and 21 million square feet of office and industrial space.

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