Ernst Portfolio Project, Better Housing Foundation Bond Default

Better Housing Foundation Ernst Portfolio Project, Series 2018A-1, Taxable Series 2018A-2, Subordinate Series 2018B Investment Losses

Illinois Finance Authority Multifamily Housing Revenue Bonds Default 

According to reports, the Ernst Portfolio Project issued by the Better Housing Foundation (BHF) reportedly defaulted in June after issuing $19 million in 2018 for BHT Chicago Housing Group C LLC . The bonds originally carried ratings of A-, A- and and BBB- rating, but now are junk-rated.

According to a voluntary disclosure in April 2019 on the Municipal Securities Rulemaking Board’s EMMA website, ”Because of the condition of the facilities, the financial performance of the portfolios has been strained. As a result, none of the portfolios will be able to make the debt service payments due on the bonds on June 1, 2019.”

BHF Chicago Housing Group C LLC is the owner of 17 multifamily rental facilities, consisting of 186 residential units. According to the disclosure, the City of Chicago reportedly has “cited nearly all of the individual properties contained in the Portfolios for numerous code violations stemming from the lack of maintenance that was necessary during the tenure of the prior Board or pre-existing conditions present when the current board took over BHF.”

Matters are further complicated by city code violations, dwindling occupancy, and the need for a cash infusion to fund repairs.

Investigating Potential Lawsuits 

The White Law Group is investigating the liability that brokerage firms may have for recommending the following  risky bonds:

• Illinois Finance Authority Multifamily Housing Revenue Bonds (Better Housing Foundation Ernst Portfolio Project), Series 2018A-1 (45202LBV5,  45202LBW3, 45202LBX1)
• Illinois Finance Authority Multifamily Housing Revenue Bonds (Better Housing Foundation Ernst Portfolio Project), Taxable Series 2018A-2 (45202LBY9)
• Illinois Finance Authority Multifamily Housing Revenue Bonds (Better Housing Foundation Ernst Portfolio Project), Subordinate Series 2018B (45202LBZ6)

According to the offering statements,  buying the bonds “involves a significant degree of risk” due to factors such as the limited sources for repayment and real estate and operating risks and that no assurances could be made that project revenues would cover bond repayment.

Brokerage firms are required to perform adequate due diligence on any investment they recommend and to adequately disclose the risks of any investment. Additionally, brokerage firms are required to ensure that all investment recommendations made are suitable in light of the client’s age, investment experience, investment objectives, net worth, and income.

If you are concerned about your bond investments in the Ernst Portfolio Project and would like to speak to a securities attorney about your potential to recover your investment losses, please call our offices at (888)637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.

For more information on The White Law Group, please visit our website at www.whitesecuritieslaw.com.