Denver firm invests $21 million in Maine affordable/senior housing
Courtesy / Steele Properties
Steele Properties of Denver is spending $21 million on the acquisition and renovation of seven Section 8 multi-family and senior housing projects and one non-section multi-family property in West Bath.
Steele Properties — a Denver real estate company specializing in affordable housing — announced the $21 million acquisition and renovation of seven Section 8 multi-family and senior housing projects and one non-section multi-family property.
Steele, which both invests in and develops property, bought the portfolio from Liberty Cos. in Portland, in a deal that closed July 21.
The portfolio includes 170 units at Fairfield Family Apartments in Fairfield, Fort Halifax Commons in Winslow, MC Smith Apartments in Farmington, Pittsfield Gardens in Pittsfield, Richmond Senior Citizens Park in Richmond, Sherwood Apartments in Farmington, West-Front Residences in Skowhegan; as well as the non-Section 8 Green Acres Estates in West Bath.
Six of the affordable housing projects are located in a 30-mile radius of Augusta.
This is the company’s first entry into Maine, said Chief Investment Officer and Partner David Asarch. Elsewhere in New England, Steele owns Section 8 properties in Hartford and New Haven, Conn.
A foundation in affordable housing
Since its founding in 2006, Steele has completed over $700 million in acquisitions, sales and development activity in 15 states, involving over 50 properties and more than 5,000 units, including over 40 tax-credit projects.
The company primarily has an eye out for “acquiring undervalued properties in poor condition and renovating them into comfortable and safe housing,” according to its website. Steele’s new construction is limited to Colorado, said Asarch.
“We focus primarily on Project-Based Section 8,” said Asarch. The federal Project-Based Section 8 program provides affordable apartment communities that are owned by private landlords with a rental subsidy that helps pay the rent for low-income tenants, according to Affordable Housing Online.
For the Maine portfolio, he said, “We looked at the numbers, looked at the amount of rehab needed and then, once we realized we could accomplish what was needed, we pursued it.”
Steele focuses on making sure that older properties are preserved as quality affordable housing, Asarch said. “There’s risk of properties going market rate,” he said. “We want to make sure they get preserved for the benefit of the residents.”
Steele got its start in 2006, but one of its principals, Stuart Heller, has been active in developing, owning and managing affordable housing projects since 1978, according to the company’s website.
In Colorado, said Asarch, Heller was one of the first developers to take advantage of the Internal Revenue Service’s Low Income Housing Tax Credit program, which started in 1986 to provide private owners with an incentive to create and maintain affordable housing, and is still the country’s most extensive affordable housing program, according to the National Housing Law Project.
Properties in need of upgrades
The Maine project is financed with low-income housing tax credits allocated by MaineHousing and tax credit equity provided by PNC Bank, as well as tax-exempt bond financing and subordinate financing provided by MaineHousing, according to a press release from Steele.
The Maine properties date to the late 1970s and early 1980s, and haven’t received any major capital improvements in many years, said Asarch.
“They’re not in terrible condition, but they need upgrades,” he said.
The scope of renovation will vary by property and encompasses extensive exterior and interior work as well as substantial energy efficiency upgrades. Rehabilitation cost is expected to be over $42,000 per unit. Interior upgrades include upgraded plumbing and electrical, paint, flooring and doors. Kitchens will be upgraded and bathrooms will receive new vanities, tub surrounds and fixtures. ADA conversions will also be completed at 12 units across the properties.
Two new community buildings with laundry facilities will be constructed, one for the southern portion of the portfolio and one for the northern portion. New playgrounds for the multi-family properties will be installed.
Rehabilitation will be done property by property, with the total job expected to be completed in 12 months, said Asarch. Tenants will be able to stay in place during renovations.
“We’re mobilizing now, and will start early September,” said Asarch.
Vacancy is low throughout the portfolio, he said. That’s in keeping with national trends, he said.
“There’s a housing crisis across the country, in terms of the number of residents who need or qualify for affordable housing and the amount of housing available,” said Asarch. “There’s a major shortage. That’s why it’s great to be able to preserve older housing stock. You don’t want to lose older housing as you gain new housing. With these older stocks, it’s critical to keep them in good condition.”
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