189 Units | Built: 1967 | Renovated: 2008

The Opportunity

Berkadia’s Mid Markets Sales Team is pleased to present the 189-unit Oak Tree Square community, boasting an attractive unit mix of 1-, 2- and 3-bedroom units ranging in size from as small as 445 SF to as large as 1,050 SF. The quiet residential setting is ideal, as is its proximate location to schools, restaurants and big box retailers. In addition, the property sits adjacent to one of the Kansas City area’s major North-South arterial Interstates I-49/US-71, which provides drivers an easy commute to both South Johnson County, as well as Downtown Kansas City.

Originally built in 1967, it was converted into a Qualified Low-Income Housing Development under Section 42 (LIHTC) provisions in 2008. In return, ownership received substantial capital from the sale of the syndicated tax credits that they were required to invest back into the property. The current Land Use Restrictive Agreement (LURA) restrictions require that 170 of the 189 total units of the property be leased to qualifying residents with incomes less than 60% of the area median income (AMI). The initial 15-year compliance period for Oak Tree Square expires in 2023 and with qualified contract eligibility (QCE), presents the opportunity for the conversion of the 170 units back to market rate over the course of the 3-year De-Control (DC) period. This substantial upside opportunity allows for the removal of LURA restrictions over the course of the three years, paving the way for new ownership to elevate current asking rents for all units at the property. The disparity between the subject’s current LIHTC rent and their competitive subset equates to a delta of approximately $150. Assuming all of the 170 legacy LIHTC units are brought to the market average rent, new ownership can boost property collections by more than $340K ( ̴25%).

Current ownership just recently purchased the property last Fall and is presently investing over $1M across the exterior of the property, as well as the interiors of the clubhouse and select units. These extensive renovations will enable the next owner to operate the property efficiently, avoiding costly capital repairs. Additionally, this heavy lifting will allow a future owner to incorporate modernized renovations and raise the asset’s market positioning as it completes the ‘qualified contract’ process and transitions to market-rate.

Investment Highlights

  • Excellent Mix of 1-, 2-, & 3-Bedroom Floorplans
  • Recently Underwent Property-Wide Upgrades in Mid-2000’s
  • Ability to Increase Rents through Light Interior Upgrades
  • Conveniently Located Just Minutes Away from Major Employers
  • LIHTC Property Offers Huge Upside Converting 170 Restricted Units to Market Rate
  • QC Eligible in 2023

Investment Advisors

BRETT Meinzer

Director

816.759.0366

Brett.Meinzer@Berkadia.com

MICHAEL SULLIVAN

Senior Director

816.759.0369

Michael.Sullivan@Berkadia.com

Alex Blagojevich

Senior Managing Director

312.845.3088

Alex.Blagojevich@Berkadia.com

DOMINIC MARTINEZ

Associate Director

816.759.0368

Dominic.Martinez@Berkadia.com

Financing

JOHN SCHORGL

Managing Director

913.209.9815

John.Schorgl@Berkadia.com

KANSAS CITY OFFICE

4800 Main Street, Suite 501

Kansas City, MO 64112

Phone: 816.531.2884

Berkadia.com

Berkadia®, a joint venture of Berkshire Hathaway and Jefferies Financial Group, is an industry leading commercial real estate company providing comprehensive capital solutions and investment sales advisory and research services for multifamily and commercial properties. Berkadia® is amongst the largest, highest rated and most respected primary, master and special servicers in the industry. This advertisement is not intended to solicit commercial mortgage loan brokerage business in Nevada.
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