Affordable Upstate, a Greenville, South Carolina-based real estate investment firm founded by Principals Brian Albers and Mario Brown, is taking a collaborative approach to real estate investing to buy and revitalize multifamily properties that maximize investors’ returns and improve tenants’ quality of life without pricing them out of their homes.
Given the recent population growth of the region and the corresponding increase in rents, safe, quality workforce housing has become increasingly scarce. Affordable Upstate's purchase of the Park West Apartments, a 359-unit, 1972-vintage multifamily property located at 357 Hillandale Road, demonstrates the potential to provide modern, energy-efficient and affordable workforce housing. The deal has been selected by a panel of local industry professionals as the 2023 winner of the CoStar Impact Awards' Sale/Acquisition of the Year for Greenville and the Upstate region.
Previously purchased by Monument Real Estate in 2016, the Park West multifamily complex was about 50 years old and needed significant capital improvements. Due to the lack of investment and corresponding physical deterioration, the financial performance of the property had also declined. Occupancy at the closing of this deal stood around 85%.
Monument brought in Tai Cohen and John Phoenix of Cushman & Wakefield to find a buyer for the property. The property initially went under contract in the spring of 2022 for $42 million. However, financing for the sale could not be secured amid a rapidly-changing capital market roiled by the rapid increase in interest rates, and the deal fell out of contract. At that point, Affordable Upstate stepped in and put the asset under contract for $39 million with the assistance of its debt and equity advisors, Scott Williams and JD Lehman of Aline Capital, a Greenville-based real estate capital advisory firm.
Drawing on its relationships in the bridge-financing space and knowing the business plan of the Affordable Upstate, Aline was able to source a bridge loan from Aflac at 65% of the purchase price, with $7 million in future funding reserved for property renovations, which totaled 70% in loan-to-cost. The three-year, interest-only note with extensions allowed Affordable Upstate to carry out needed renovations and still allow for cash flow. Aline was able to place the loan into a special ESG allotment within Aflac’s balance sheet, meaning the interest rate was 75 to 100 basis points inside of the market, which was crucial in helping the deal work from a financial-return standpoint. The loan qualified for a further rate discount as Affordable Upstate is keeping 75% of the units subject to certain area median income (AMI) standards during the ownership period.
The new owner is also working to promote environmental and social governance at Park West, installing low-flow plumbing fixtures that save millions of gallons of water annually in addition to substantially lowering the property's utility bill using some of the future funding for this purpose. Affordable Upstate has also arranged to provide reduced-cost cable and internet plans for all tenants, helping to address the disparity in which one in four U.S. households at or below 60% of AMI cannot afford Internet due to the cost. Affordable Upstate put together an agreement with a local internet carrier to provide a bulk discount for wi-fi and cable for apartment residents, which is uncommon at comparable properties.
In addition to providing needed housing in the area, the projected value of the stabilized value of the property is more than $80 million, providing a substantial return for the investors.
About the Project: As in many places across the country, Greenville and the entire Upstate South Carolina region is facing a sharp decline in the availability of affordable housing for low-income residents. Co-founders Brian Albers and Mario Brown of Affordable Upstate, a Greenville-based real estate investment firm, are working to change that by working with investors and real estate finance experts to buy and improve affordable housing in the region. The firm's recent purchase of the 359-unit Park West apartments, with acquisition financing secured by Aline Capital, demonstrates the potential for preserving and improving affordable housing, while still achieving a suitable return for investors.
Judges' Comments: "One of the most pressing needs in this market is affordable housing. To see the determination of those involved in this deal to see it through all the setbacks and to find a local owner who is committed to that mission deserves a medal. In addition to addressing an important area, the size of this affordable housing transaction, an area that often discourages investment groups, shows it's possible to achieve strong returns and still address the need," noted Senior Brokerage Associate Richard Barrett of Colliers.
"This collaborative effort to preserve affordable housing under challenging circumstances and changing capital market conditions is well deserving of special recognition," said Dustin Read, director of Master Real Estate Development Program at Clemson University.
They Made it Happen: Affordable Upstate Principals Brian Albers and Mario Brown, Senior Advisor JD Lehman and Managing Director Scott Williams of Aline Capital, and John Phoenix and Tai Cohen of Cushman & Wakefield's Multifamily Advisory Group.
