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Property: The Marquis
Buyer: American South Capital Partners, VPG Holdings
Seller: Withheld
Property type: Garden style
Units: 250
Location: New Orleans
Total purchase price: Withheld
A few months after acquiring a 1,068-unit affordable housing portfolio in the Carolinas, American South Capital Partners has bought a 250-unit apartment community in New Orleans for an undisclosed price.
The Los Angeles-based fund manager, a joint venture of SDS Capital Group and Vintage Realty Co., partnered with New Orleans-based VPG Holdings to purchase The Marquis, an affordable property built in 2009.
Making the numbers work for a property in New Orleans, where insurance costs are notoriously high, isn’t easy, Tyler Epps, senior vice president of originations for ASCP, told Multifamily Dive.
Annual insurance costs are up to $4,000 per unit in some of the properties Epps has examined in the city, but The Marquis had some advantages.
“This deal didn’t have that dramatic of an insurance rate just because of the quality of the product — it is 2009 vintage,” Epps said. “Then you layer on the fact that the ground-floor level is parking, and the actual units are above grade and above the parking. So, flood insurance is a little bit cheaper because residents aren’t as likely to be flooded because they’re about 10 feet above the ground.”
To underwrite the deal, ASCP took advantage of Community Development Block Grant dollars from the post-Hurricane Katrina era that could be assumed as part of the transaction.
“We were able to acquire 250 units of high-quality, newer construction at a very attractive cost basis,” Epps said.
The Marquis features a combination of non-restricted and deed-restricted affordable housing units comprising one-, two-, three- and four-bedroom floor plans. A large portion of the units are at deeper affordability levels for residents earning less than 60% of area median income.
ASCP and VPG Holdings plan to fund deferred maintenance and the implementation of energy- and water-efficient appliances, including water heaters, dishwashers, refrigerators and air conditioners.
“We do have capital set aside for pretty standard interior upgrades, whether that’s new countertops, appliances, cabinets and flooring as units turn,” Epps said. “This is more of a deferred maintenance exercise — upgrading HVAC systems and the pool and dealing with roofs and asphalt in the parking areas.”
