Upton Druid Affordable Housing Portfolio

Upton Druid Apartments is a 78-unit family affordable housing community including 29 properties in Baltimore, Maryland. All units are 100% supported by a Project-Based Section 8 HAP Contract, specifically Option 3b, MTM Use Agreement which expires in 2035. This causes tenants' rents in the Portfolio to be heavily subsidized by the federal government.

New ownership has the opportunity to achieve a Budget Based Rent Increase (“BBRI”) by completing renovations and modernizing units, driving rent growth, and capitalizing on the demand in the submarket. Based on HUD’s Budget-Based Rent Adjustments for Mark-to-Market Properties (released in February 2024), Upton Druid is ripe for a BBRI considering the effective rents are less than 70% of fair market rent (“FMR”). Additionally, the Portfolio has been given a Real Estate Assessment Center (“REAC”) score under 60 for its last two inspections. With the implementation of a BBRI, new ownership can anticipate increasing average monthly effective rents by 14%. Further, this Portfolio is the only asset current ownership manages in Baltimore, resulting in an opportunity for management efficiencies Portfolio-wide for an investor with boots on the ground already.

Upton Druid Apartments is situated along Druid Hill Avenue in the historic Upton neighborhood of West Baltimore. The area is known for its proximity to key institutions including the University of Maryland Medical Center, the Baltimore Convention Center, and Johns Hopkins University. Despite historical economic challenges, the area is now experiencing steady revitalization, driven by city efforts to improve housing, infrastructure, and public safety.

Upton is predominantly residential, with a mix of single-family homes and multi-family apartment buildings. The area has a median household income below the citywide average, which makes it a prime location for affordable housing programs such as Section 8. Given the local income levels and the need for affordable housing in Baltimore, demand for Section 8 properties remains high, particularly in neighborhoods like Upton that are under revitalization. Local initiatives, like the West Baltimore Revitalization Plan, promise long-term improvements to infrastructure, public spaces, and overall livability, further strengthening the investment potential.

Upton Druid Apartments presents an outstanding opportunity to preserve affordable housing through renovations and hands-on management.