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RICHMOND HEIGHTS, OH-Associated Estates Realty Corp. is selling 12 properties and exiting 30 more management contracts to completely divest itself of affordable apartment housing properties by March 2009. The REIT manages 4,816 units of Low Income Housing Tax Credit, Section 8 and Section 202 housing properties, and owns 1,254 Section 8 units.

The company-owned properties, all in northeast Ohio, are now for sale, says a company spokesman, including the pictured Sutliff Two Apartments, a 185-unit senior housing property in Cuyahoga Falls. He tells GlobeSt.com that he can’t say the amount the firm will ask for the 1,254 units. In the REIT’s 2007 outlook in its second quarter report, the company says it expects to acquire $90 million to $150 million of properties in 2007, and to dispose of $100 million to $150 million of properties, as part of a long-term plan to shed non-core assets and move into higher growth markets. In total, the REIT owns or manages 99 multifamily, totaling almost 20,000 units in 10 states, at occupancies in the 90s.

“Affordable housing really isn’t part of our growth strategy,” the spokesman tells GlobeSt.com. “We want to grow our market-rate portfolio, particularly in the faster growing markets outside of the Midwest, including the Baltimore-Virginia-Washington DC area, Atlanta and Southeast Florida.” For example, the company sold in the second quarter a 949-unit, high-rise property in Euclid, OH for $34.6 million, at 4.5% cap rate. It also bought a 268-unit property in Norfolk, VA and acquired its joint venture partner’s 51% interest in an 843-unit property in the Greater Atlanta market, both examples of the company’s push into the East Coast.

The owner of 23 of the 30 managed properties recently notified the company of its intent to self-manage the complexes, effective Jan. 1. Associated plans to transition the remaining third-party managed properties during the next three-to-six months. Also, the REIT will spend about $200,000 by eliminating jobs for those who worked with the affordable housing sections, the spokesman says.

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