Aspect Real Estate Partners has worked with clients from various sectors and has closed numerous real estate deals ranging from office leases to redevelopments to multifamily investments. Each transaction required due diligence, research, and careful negotiation. As with any client, Aspect ensures a successful transaction by employing tried-and-true processes that help everyone meet their needs.
In this case study, Aspect facilitated the transaction of a 100-unit affordable senior living apartment building located in Newport Beach. Selling this asset not only involved understanding its uniqueness and value but also how to integrate other essential requirements of the seller into the deal. The team worked meticulously with the seller to find the most qualified buyer and successfully closed the transaction.
The Client: Lutheran Church of the Master – Founders of Seaview Lutheran Plaza
Seaview Lutheran Plaza is a 100-unit affordable senior living apartment project located in Newport Beach, California. It has convenient access to grocery stores, parks, medical facilities, and public transportation. It is the only affordable housing project for seniors in the city. The property is reserved for low-income seniors of at least 65 years of age and appeals to those seeking a safe, independent living style.
The Lutheran Church of the Master, located adjacently, constructed the project in 1981 under the Section 8 Housing Assistance Payments (HAP) contract loan. The HAP contract, issued by the U.S. Department of Housing and Urban Development (HUD), allowed them to provide affordable housing to the public by subsidizing rent, including maintenance, water, sewage, and garbage collection.
The Challenge: Seeking the Appropriate Buyer for an Affordable Housing Community
In 2021 the Church decided to sell Seaview Lutheran Plaza and utilize the profit from the sale to more efficiently further their mission. Thus they required a reliable buyer with expertise in ownership and management in this niche asset class, would be capable and ready to negotiate favorable terms of sale, and of course, be a good neighbor in the community.
It was imperative to the seller that all prospective buyers would keep the property in excellent condition and ensure that it would remain as an affordable senior living apartment project. Therefore, prospective buyers had to be experienced in owning and managing this type of asset. The project was built under a HAP contract. These contracts are typically renewed to maintain its status as an affordable housing community. Due to the constraints of the contract and city agreements, buyers would be practically unable to convert the property to other uses.
The Lutheran Church of the Master sought a commercial real estate brokerage company that they could trust in such an important matter and one that had the experience to manage multiple buyers, offers, negotiations, and sale transaction. They approached Gary Abraham of Aspect Real Estate Partners and he took it from there, setting up the plan and leading the process to its conclusion. The team at Aspect have represented numerous sellers, including other non-profit organizations.
The Process: How did Aspect Approach the Sale?
Projects like Seaview Lutheran Plaza are highly valued assets to real estate ownership companies specializing in affordable multifamily projects. There are a handful of these companies nationally. They have the expertise and financial ability to close these types of sales relatively quickly. Due to the affordable characteristic, sales of these projects must receive approvals by the necessary local and federal agencies making the process more complex than a typical sale.
There was no need to market the project widely. The qualified prospective buyers were already known already to the seller and Aspect. And the seller did not want to disclose the offering to the broad market. They wanted to keep the sale process confidential for many reasons. Aspect set up an initial round of offers from the buyer pool. Several competitive offers were received. During the process, Aspect managed communication between the Church and the prospective buyers. Aspect managed the sale in two rounds of competitive blind offer opportunities. The process allowed buyers to bid with a premium to ensure that they were committed to purchasing the property. Meanwhile, Aspect kept communication open between the seller and the buyers to ensure the process continued without difficulty. All offers and terms between the buyer pool were kept confidential before, during and after the process. Only Aspect and the seller were apprised of the offers’ details.
After two rounds of bidding from multiple buyers, the final winning bid was selected, and the sale process was initiated. Aspect ensured that both buyer and seller had their interests fulfilled. Given the complex nature of the HUD contracts and the Section 8 rent assistance program attached to the property, Aspect also helped manage communications between the seller, seller’s counsel, buyer, buyer’s council, and seller’s management company.
Aspect met the seller’s objectives. The $46.2 MM price exceeded the seller’s estimate with a buyer who is 100% committed to the continued excellence of service that Seaview Lutheran Plaza is known for.
Selling a property like the Seaview Lutheran Plaza involved much more than going to market with a price and fliers. In all cases we help find capable buyers who can close. And in this case it was equally important to find a buyer in equal commitment to the project as the seller. As such, Aspect’s process and expertise was especially valuable in managing the sale.
Not only was Aspect able to maximize the value of the property through a competitive bidding process, but it was also critical that we managed productive communication between seller and buyers. The sale of Seaview Lutheran Plaza was just as much about the communication as it was about the transactional aspect of the sale.
Aspect Real Estate Partners knows how to lead through the sales process. Our network and depth of experience make the difference in complex transactions like Seaview. Talk to us today to get your property on the market!