Challenge: Bellflower Friendship Manor is a 144-unit seniors housing development in the heart of Los Angeles County. The project needed a major renovation, particularly regarding long-term mechanical upgrades, such as air conditioning, new elevators, new plumbing, interior renovations and exterior structure reinforcement.
Current rents were drastically below market, which limited refinancing options to fund renovations. However, the property’s rent limitations under HUD Section 236 were about to expire after 40 years — which would enable the property to pursue market rents.
The property owner, Bellflower Friendship Church, had received multiple offers promising the highest price, maximum renovation and long-term affordability — but at a value $2 million less than an appraisal completed just 60 days prior.
Strategy: Colliers’ affordable housing experts determined that the value of the property was potentially higher than the appraisal value. We marketed the property to more than 5,000 qualified affordable housing developers nationwide with a custom marketing strategy that highlighted the strength of the property and the surrounding area as well as a 40% mark-up-to-market rent adjustment, which a developer could achieve with a tax credit execution. The opportunity was marketed as “un-priced” to maximize value in the current market.
With an aggressive timetable and marketing plan, the team pursued the most qualified affordable housing developers, which included non-profit and for-profit developers. After launching, more than 350 groups expressed strong interest and executed confidentiality agreements. Within 45 days, we had scheduled more than 25 tours with initial offers due within 60 days.
Result: We were able to achieve a final price of $18.5 million, with more than $250,000 non-refundable immediately upon execution of the purchase and sale agreement — all without the buyer, Community Preservation Partners, even needing to walk the property.
In addition, we were able to secure $7 million for renovation, a 55-year regulatory agreement to extend the low-income rent protections and a 40% increase in the HUD subsidy on the mark-up-to-market rents. This sale was an absolute win for the seller, buyer and the residents.