TODAY’S DEALS: AFL-CIO Invests $33.5M in Boston Public Housing Redevelopment

3 min read

HIT provides $33.5 million for a public housing rehab; Mesa West Capital funds a $32.3 million loan in two weeks; and Walker & Dunlop places $19.8M for a pair of LIHTC assets in Virginia.

Old Colony (Courtesy Boston Housing Authority)

Boston—The AFL-CIO Housing Investment Trust (HIT) is investing $33.5 million of union pension capital to construct 129 apartments for low-income households at Old Colony, one of Boston’s largest and most physically distressed public housing properties. The endeavor is part of a comprehensive redevelopment plan by the Boston Housing Authority and MassHousing in conjunction with the developer, Beacon Communities. This financing is part of the second phase of the plan, which has an estimated cost of $61.4 million.

HIT previously invested $26.7 million into Old Colony’s $56.8 million first phase redevelopment, which included 116 housing units and a 10,000-square-foot learning center that opened in the spring of 2012.

“The HIT’s investment in the Old Colony redevelopment is part of our long-standing commitment to support the City of Boston in developing and preserving quality affordable housing for low-income families,” says HIT senior vice president Tom O’Malley, who is also the director of the HIT’s New England regional office.

He adds that the union-built project “is already helping improve the quality of life for residents, who are enjoying the new environmentally friendly housing and attractive outdoor green space.”

Mesa West Capital funds $32.3 million loan in two weeks

New York—Mesa West Capital provided Benchmark Real Estate Group with $32.3 million in first mortgage debt for its recent acquisition of an east side apartment building.

The loan, which closed in only two weeks, was secured by 320 East 22nd Street, a 94-unit rental building located in the Gramercy Park submarket of Manhattan. Part of the loan proceeds have been earmarked to allow Benchmark, which purchased the building from Mann Realty, to immediately begin in-unit and base building upgrades to improve the marketability of the building.

This transaction would not have closed had it not been for Mesa West delivering on its promise to fund quickly, said Benchmark’s Jordan Vogel who along with Aaron Feldman founded Benchmark in 2009 to focus on multifamily investment New York City. Over the past 24 months, Benchmark has acquired approximately a dozen properties with an aggregate value of $200 million.

Despite the lower in-place cash flow, we were able to get comfortable with the business plan based on current residential market dynamics and Benchmark’s proven ability to create value in its portfolio, said Russell Frahm of Mesa West Capital, who originated the financing for the firm’s New York office. This deal demonstrates our ability to provide a structured first mortgage solution on a transitional asset for a strong local sponsor.

The financing was brokered by Jon Estreich and Chris Barnett of Estreich & Co. Inc.

Walker & Dunlop provides $19.8M to CAPREIT

Arboretum Place

Newport News, Va.—Walker & Dunlop has provided $19.8 million under Freddie Mac’s CME program to CAPREIT Inc. for Arboretum Place and Silver Hill at the Arboretum, adjacent properties in Newport News, Va. Both properties are affordable under Section 42 of the LIHTC program. Arboretum Place has 76 LIHTC units (41 percent) and Silver Hill at the Arboretum has 123 units (80 percent).

“The debt financing for these two beautiful, LIHTC properties was instrumental in making the properties work,” says Dick Kadish, president of CAPREIT Inc. “For the investor, by generating an economic return we provide a stimulus for affordable housing communities to be built and maintained; for the resident, their apartment homes are upgraded, professionally managed and will be well-maintained.”

Both acquisition loans were structured with 10-year terms with three-years interest only, followed by 30-year amortization periods. The financing for Arboretum Place was underwritten to a 79 percent loan-to-value with a 1.40x debt-service coverage ratio. The financing for Silver Hill at the Arboretum was underwritten to a 77 percent loan-to-value with a 1.30x debt-service coverage ratio.

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