Capmark Sells Low-Income Housing Portfolio for $102.4M

Two weeks after having officially emerged from bankruptcy, Capmark has sold its collection of partnership interests and other assets associated with 287 properties encompassing 45,000 low- and moderate-income housing units to Hunt Cos. for $102.4 million.

October 12, 2011
By Barbra Murray, Contributing Editor

Two weeks after having officially emerged from bankruptcy, Capmark Financial Group Inc. has completed the first phase of the disposition of its national low-income housing tax credit asset portfolio. Hunt Companies Inc. emerged victorious in the real estate finance company’s bankruptcy auction, agreeing to pay $102.4 million for the collection of partnership interests and other assets associated with 287 properties encompassing 45,000 low- and moderate-income housing units.

As of the close of the second quarter of this year, the fair value of the assets in Capmark’s affordable housing business unit was estimated to be $93.9 million, excluding cash and cash equivalents, according to a document filed with the bankruptcy court. Hunt shelled out $63 million on the initial closing of the LIHTC portfolio purchase.

“This transaction represents a unique and strategic opportunity for Hunt,” Woody Hunt, chairman and CEO of Hunt, said. “This complementary acquisition enhances our real estate portfolio and will help us secure a leading position in the affordable housing market.” While Hunt will soon be in full possession of the portfolio, the Capmark connection to the assets will not end, not exactly. Hunt has tapped former Capmark employees to manage the portfolio along with Hunt Capital Partners and Hunt support services staff.

The LIHTC market was not spared during the credit crunch. Investors made a beeline away from the market when the financial crisis began to take hold, but fears about low-income housing proved unwarranted.

“Industry observers have expressed concern about the potentially negative effect of national economic conditions on the health of housing tax credit inventory during the period from 2008 to 2010,” Reznick Group, an accounting, tax and business advisory firm, notes in a report released in August. “However, the data that Reznick Group collected for 2008 to 2010 consistently suggest that this was not the case. For 2008 and 2009, the percentage of underperforming properties was largely consistent with that of pre-recession years. The number of underperforming properties decreased for two consecutive years after 2008, reaching what appears to be a historically low level in 2010.