24 Apr Beyond the Standard Multifamily Close
Benji Azar of ELIFIN® represented both parties in the successful sale of the multifamily portfolio located at 870, 4900, 4910, and 4920 Alsace Street in New Orleans, LA.
Challenge
On the surface, this appeared to be a straightforward multifamily acquisition. In practice, it was anything but. The portfolio consisted of four separate parcels, each with its own legal description, existing lease obligations, and deferred maintenance profile. The seller was not in a position where a conventional close served their interests, needing a structured income stream rather than a lump-sum taxable event. At the same time, the buyer needed time to stabilize rents before conventional debt would support the deal. A standard purchase agreement was not going to work for either party.
Strategy
Benji structured the transaction using a Membership Interest Purchase Agreement, commonly referred to as a MIPA, which allowed the deal to function as an installment sale. The seller carried the paper over a defined term, spreading gain recognition over time under Section 453 installment sale treatment rather than absorbing the full tax burden at close. The buyer received control and possession of the properties immediately, allowing them to begin executing their value-add business plan while making scheduled principal and interest payments to the seller.
To manage the complexity of four separate parcels, Benji carefully sequenced the title work, secured estoppels on occupied units, and ensured the MIPA encumbered all four addresses as a single collateral package. A release price mechanism was also negotiated, giving the buyer the ability to peel off individual buildings as they stabilized and refinanced, while preserving the seller’s security on the overall note.
Result
The transaction closed approximately eleven weeks from executed PSA, a timeline that reflected the complexity of the structure rather than any lack of execution. The seller secured a structured income stream that softened their tax burden, while the buyer gained immediate control of a value-add portfolio with the runway needed to execute their business plan. The MIPA structure delivered a result that neither a conventional close nor traditional bank financing could have produced on a scatter-site portfolio of this nature.
Leading Agent
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