Since 2008 Viking Companies has assembled a substantial portfolio of fully-rented apartment complexes that are part of the United States Housing Act of 1974 – Section 8 Project-Based Housing Assistance Payments (“HAP”) program and are tenant-subsidized under long-term renewable contracts with the U.S. Department of Housing & Urban Development (“HUD”).* Viking’s affordable multi-family housing acquisitions have been assembled utilizing its historical approach to property acquisition that focuses on improved income-producing property with existing, stable long-term cash flow. Consistent with these efforts, Viking’s Section 8 portfolio has generated strong and reliable cash flow; has provided protection against adverse market/economic conditions; and generally has outperformed its market-rate investment competition. Viking is currently generating tax-deferred average annual cash flow returns of over 10% on its portfolio of Section 8 properties.
* Under the HAP program, an owner enters into from one to twenty-year renewable contracts with HUD under which HUD agrees to subsidize rental payments for a specified number of qualified units in an apartment project. Under this contract, HUD and the owner establish fair market rents at the outset of the contract period (and, importantly, HUD approves annual rent increases based on inflation, property improvements and local market conditions) and HUD pays the owner of the apartments directly for the subsidized portion of the established rent on a monthly basis. Historically there has been an average twelve to eighteen month waiting list for tenants in Viking’s portfolio properties. While HUD programs can be complicated and require compliance with a number of government regulations and procedures, these requirements have their own advantages. In addition to the direct benefits associated with rent support, owners of HUD properties are required to produce annual certified financial statements, a procedure that is rarely performed by most apartment owners; and HUD properties are required to undergo regular property inspections by professional inspection companies hired by HUD, a requirement which forces owners to maintain the properties in good physical condition and which owners therefore also require of their tenants through the owners’ own regular inspections.