Municipal Capital Appreciation Partners

MCAP's Investment in the Purchase & Subsequent Restructuring of Municipal Bonds Secured by an Elderly, Multifamily Housing Complex

MCAP sought to generate investment returns through the purchase of bonds secured by Kingsport Apartments, a Section-8 assisted, elderly, multifamily housing complex.  MCAP provided interim financing, which was later exchanged for a new issue of municipal housing revenue bonds used to finance the acquisition of Kingsport Apartments by a not-for-profit owner.

Strategy

  • Exchange bridge loan for bond issue
  • Normalize operating expenses
  • Seek FHA or other credit enhancement once successful operating history established
  • Sell credit enhanced bonds with favorable terms and conditions and reduced risk

Value-Added Actions

  • MCAP made an interim taxable loan of $5.5 million.  The loan was exchanged for a new issue of municipal revenue bonds, which financed the purchase of Kingsport Apartments by a not-for-profit organization, and made a temporary investment of $2.6 million
  • Purchased $8.1 million Series 1999-A and Series 1999-B Village of Port Chester Industrial Development Agency Civic Facility Revenue Bonds
  • Secured Fannie Mae insurance and structured refunding bonds

Results

  • Purchased and resold newly issued subordinate bonds
  • Bonds were repaid at a premium in 2001

A New, Recycled Investment

  • In 2011 MCAP acquired the property with the proceeds of a new issuance of tax exempt bonds. MCAP is seeking to realize returns through the rehabilitation of the property and the syndication of Low Income Housing Tax Credits awarded to the property. Read More