Affordable Complex Sells For $24M In Frederick As Region Works To Preserve Low-Income Units
The RLM Preservation Fund has purchased an affordable housing development in Frederick from KB Cos. for more than $24M as the state continues to grapple with a shortage of units for low-income residents.
The deal for the 113-unit Overlook at Avalon property included the new owner taking on $18.8M in existing financing from the Department of Housing and Urban Development, according to the seller's broker, Greysteel. The new owner, RLM Preservation fund, is a partnership between Rail Field Realty Partners and L+M Development Partners.
The property, built in 2017, sits just north of Frederick's Golden Mile corridor. It was developed using the Low-Income Housing Tax Credit program, which gives it affordability restrictions: Six of the units are reserved for those making up to 50% of the area median income, while the remaining 107 are set at 60% AMI.
Greysteel worked with the seller for years to guide it through issues with the right of first refusal process, a "broken condominium structure" and pursuing a federal refinancing deal, it said in the release.
"Overlook at Avalon was received extremely well by the market," Henry Mathies, the national leader of Greysteel’s affordable housing team, said in a release. "In pursuing its refinance during our marketing period, the seller locked their interest rate just ahead of when the capital markets became very volatile, facilitating our ability to market a well-performing asset, with very attractive permanent financing in place, during a time of growing macroeconomic uncertainty.’’
Maryland faces an affordable housing shortfall, especially for households making less than half of the area median income, according to the National Low Income Housing Coalition.
That organization estimates 34 units are available for every 100 households classified as extremely low-income tenants. It also found 59 units are available for every 100 renter households at or below 50% of AMI.
A four-person household qualifies as extremely low-income in Maryland when it makes no more than $31,650 a year. The National Low Income Housing Coalition estimates that a family must earn more than $60K a year to afford a two-bedroom rental.
That demand for affordable rental units has spurred some investors to attempt to boost the supply of affordable housing locally.
San Diego-based Fairfield this month purchased the Villages at Marley Station in Glen Burnie to convert the 757-unit complex into an affordable housing development for households earning 60% of AMI.
State and local governments have also unveiled plans to try and bolster the availability of affordable housing in Maryland.
Baltimore County Executive John Olszewski Jr. this week unveiled plans to create a $16M affordable housing trust fund and loosen requirements, allowing developers to build lower-cost homes in that jurisdiction.
Maryland has also tried to bundle state and federal dollars to entice developers to preserve affordable housing or build new units. Last spring, the Maryland Department of Housing and Community Development said it planned to direct $200M to affordable housing programs to add 6,000 new units.
The state also doled out $32M in federal Low-Income Housing Tax Credits and state Rental Housing Funds this fall to 12 projects either building or preserving roughly 1,300 affordable housing units.
