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Boston-based AEW Capital Management has acquired a south Charlotte apartment community with assistance from a federal loan program aimed at designated workforce housing.
AEW purchased the property from New York-based PGIM for $104 million, according to Mecklenburg County real estate records. The deal closed in April but was just recently announced by Newmark, which brokered the sale on behalf of PGIM. The firm also secured a 10-year, $52 million acquisition loan for AEW through Fannie Mae's Expanded Housing Choice program.
The EHC initiative provides lower financing for property owners who accept Housing Choice Vouchers as a source of income in North Carolina and Texas, where it is not required by law. A housing voucher represents the state's payment to the landlord on behalf of the renter who is then responsible for the remainder of the balance.
Providence Court, built in 1996, is a 420-unit apartment community that is designated as workforce housing. The Fannie Mae loan is a directive of the Federal Housing Finance Agency. Anthony Tarter, Newmark executive managing director, capital markets, said the program aims to incentivize owners to accept housing vouchers to prevent tenant displacement.
AEW, a global real estate investment management firm, will self-restrict at least 20% of the property's units to maintain current affordable rent levels. Market-rate rent there ranges from $1,497 for a one-bedroom unit to $2,074 for a three-bedroom unit.
"A lot of these properties (from this era) were bought, and value-add strategies were implemented, so residents who couldn’t afford to live there anymore were displaced," Tarter said. "They're basically saying, 'We’re going to restrict a certain amount of the units at a certain AMI and not completely redo this property where it displaces residents.'"
Josh Davis, Newmark executive managing director of capital markets, said Providence Court, which is about 7 miles south of SouthPark, is a location that has seen a lot of growth in recent years. This, Davis said, has included the turnover of existing multifamily assets into market-rate Class A inventory.
"What we have seen in this part of the city is this more traditional buyer coming in looking to do unit enhancements and push rent hard," he said. "That has made it harder for folks to be able to stick around in these good locations with great schools and linkages to the rest of the city. This (EHC program) is a good way to keep the affordability in high-quality locations."
John Heimburger, Newmark vice chair, facilitated the sale. The EHC financing loan was handled by Tarter and Davis, as well as Chris Caison and C.J. Webb.