A state agency is seeking a buyer for 1,221 affordable rental apartments in an effort to improve the quality of the homes and maintain affordability for most of the existing tenants.

The Hawaii Housing Finance and Development Corp. published a request for proposals last week to solicit bids from private investors for its portfolio of six rental projects on Oahu, Maui and Hawaii island.

HHFDC is offering to sell the apartments as leasehold real estate with 75-year land leases that would return ownership of the portfolio to the state after the leases end.

One buyer is being sought for all six properties, which are being marketed without an asking price.

Commercial real estate firm CBRE was retained to broker a sale, and describes the portfolio as a “one-of-a-kind opportunity” for a buyer to increase cash flow from rents and benefit from managing so many apartments in an undersupplied housing market where it’s difficult to build new housing.

Some observers have expressed concern about rents becoming less affordable under private ownership. HHFDC has attached conditions to the sale that would limit rent increases to 2 percent annually for five years for most tenants and ensure tenants have moderate incomes. One project for seniors would have the 2 percent limit run for the life of a lease.

“Our goal is to renovate the properties while keeping rents affordable and minimizing displacement of existing tenants,” Craig Hirai, HHFDC executive director, said in a statement.

However, most tenants in the six projects have lower incomes and rents than what would be allowed under private ownership through the state leases.

Currently, most tenants earn no more than 60 percent of the median income, which equates to $43,980 for a single person or $62,760 for a family of four on Oahu. Comparable incomes are lower on the neighbor islands. Average monthly rents for existing tenants range from $942 to $1,268 for units ranging from studios to three-bedroom apartments.

Under the sale offering, tenants could earn up to 80 percent of the median income at two properties — Pohulani Elderly in Kakaako and Kekuilani Courts in Kapolei. And at four properties — Kamakee Vista and Kauhale Kakaako in Honolulu, Honokowai Kauhale on Maui and Lailani Apartments on Hawaii island — 60 percent of tenants could earn up to 80 percent of the county median income, and the rest could earn up to the median. Existing tenants with higher incomes would be permitted to stay.

HHFDC said reserving at least 60 percent of all units for households earning up to 80 percent of the median income aligns with a policy tied to bonds used to develop the projects.

One reason HHFDC wants to sell the portfolio is to retire remaining bond debt totaling $76 million. This would save the state about $6.3 million in annual payments. Selling the portfolio also would improve conditions at the properties because state procurement law results in delayed maintenance and the cheapest improvements.

HHFDC estimates that $13 million in basic improvements are needed now, and that these and future maintenance can be done more efficiently by a private owner.

Another benefit HHFDC anticipates is focusing more on its core mission, which is to help finance development of new affordable housing.

Most state-owned affordable housing is held by the Hawaii Public Housing Authority, but the HHFDC owns six that were financed through programs it administers.

If the portfolio is sold, HHFDC would continue to provide many tenants with rental subsidies that it provides now. These subsidies total $1.4 million a year. This subsidy is expected to come from sale proceeds after bond debt repayment.

HHFDC hopes to find a buyer and complete a sale by January. The deadline to submit offers is 2 p.m. Sept. 13. More information is at hhfdcportfolio.com.