488 Commonwealth Avenue
Boston, MA 02215
The Kenmore Abbey Apartments is a 199 unit elderly rental community in the Fenway neighborhood of Boston, located steps away from Fenway Park. The historic property was constructed as a hotel in the late 1890’s and was converted to its current use in 1984. Kenmore Abbey consists of two brownstone buildings that are architecturally significant and are connected by a footbridge between their second floors. It is now 100% elderly Section 8 property with a very strong waiting list for occupancy.
- Massachusetts Department of Housing and Community Development
- Boston Private Bank and Trust Company
- Alliant Capital
- RBC Capital
The Preservation Challenge
Kenmore Abbey is one of the six Massachusetts properties acquired by Preservation of Affordable Housing from State Street Development in the summer of 2012. The six property portfolio includes 841 apartments which house seniors and low- and moderate-income families.
Kenmore Abbey’s proximity to Boston University and Fenway Park made it susceptible market rate conversion in 2014, the year its HAP contract was scheduled to expire. By securing this property as a member of a portfolio transaction from a Seller liquidating their portfolio, POAH was able to purchase this property at a discount to its ultimate worth in a market-rate setting in a few years yet to come.
The preservation of Kenmore Abbey was contingent on POAH’s ability to quickly execute an acquisition strategy for the six property portfolio. This proved to be a challenge because the seller was in ongoing litigations with the lender which created implications to refinancing the portfolio and applying for low income housing tax credits. To assure that the transaction and renovations were completed in time to be eligible for the 2013 tax credit rate, POAH became engaged in resolving the litigations. The acquisition also required POAH to renew and negotiate the terms of the property’s 121a tax agreement with the City of Boston. The tax agreement stabilizes the real estate tax liability of the property in exchange for the provision of low-income housing and served as an important preservation tool in the transaction.
In addition to engaging in negotiations, POAH had to mitigate several financial risks associated with the portfolio in order to secure an equity investor and mortgage lender. The Boston properties, including Kenmore Abbey, face a large Section 8 overhang risk. The Section 8 rents issued to the properties are significantly higher than their maximum tax credit rent eligibility. If the HAP contracts were not approved for renewal, the properties’ rental income would be dependent on the lower tax credit rents. To reduce the impact of this risk, POAH created a special reserve to help transition the properties in the rare event the HAP contracts were lost.
As it often does with its acquisitions, POAH will make investments in energy efficiency installations and renovations as part of its corporate commitment to stewardship of the environment and reducing energy consumption. In addition to new energy efficient windows, Kenmore Abbey will receive a new solar hot water system. The system works by feeding the cold water line into a solar storage tank that is heated with roof top solar panels via a heat exchanger. The water is then fed back into the existing hot water tanks, which will heat the water even on cloudy days.