Red Stone Tax Exempt Funding Provides $71,100,000 In Tax-Exempt Financing For Six "Affordable" Multifamily Properties In Texas
October 2, 2012
NEW YORK, N.Y. - Red Stone Tax Exempt Funding (“Red Stone”) announced that it recently closed the following tax-exempt bond transaction through its Direct Bond Purchase Program:
Red Stone structured and acquired six series of tax-exempt bonds, the proceeds of which will provide acquisition, renovation and permanent financing of six “affordable” multifamily rental properties in Texas. The properties were acquired by affiliates of Dalcor Companies, a Dallas-based real estate acquisition, development and management firm. The $71.1 million in bonds were issued by the Texas State Affordable Housing Corporation. Indianapolis-based City Real Estate Advisors will also invest approximately $33 million in these properties through its sponsorship of Low Income Housing Tax Credits limited partnerships. Merchant Capital of Montgomery, AL also acted as an advisor and placement agent for Dalcor. The properties are located in Houston, Dallas, Beaumont, Wichita Falls, Bryan and Huntsville.
“In the affordable housing industry we call this a “recycling” transaction,” explained James Spound, President of Red Stone. “All six properties were constructed in the mid-1990’s as communities that were capitalized through the sale of Low Income Housing Tax Credits and, thereby, restricted to tenants earning not more than 60% of their respective area median incomes”. Spound further explained that, “All of these properties currently represent stable communities that provide quality housing to their tenants. As the prospective new owner, Dalcor approached Red Stone with a vision for taking six successful communities and achieving a higher operating performance through fresh management approaches and strategic capital reinvestments. In particular, planned capital improvements should allow the properties to operate efficiently and competitively for many years.”
While the Dalcor team has over 27 years’ experience in operating multifamily housing, this portfolio transaction represents the company’s first foray into the affordable housing segment using tax-exempt bonds and low income tax credits. “We have been studying this industry for several years and waiting for the right investment opportunity,” said Dale Dodson, Founder and President of Dalcor. “In preparation for this opportunity, we also assembled a top-notch team to raise debt and equity capital. This entire group demonstrated a high level of commitment to this transaction and kept all promises. I couldn’t be more pleased with how Red Stone and the rest of our financing team performed.”