By Jeffrey Steele
Bellwether Enterprise Real Estate Capital LLC has closed $42 million in refinancing for three Charlotte, N.C., affordable housing properties. The company is the commercial and multifamily mortgage banking subsidiary of Enterprise Community Investment.
The loans provided funding for these and other public housing properties as part of a larger portfolio Rental Assistance Demonstration (RAD) program transaction.
RAD, a program of the Department of Housing and Urban Development (HUD), allows housing authorities to access private capital to meet capital needs while also protecting long-term affordability.
Desire for flexibility
“We ran into a few challenges while trying to execute the transaction,” Victor Agusta, senior vice president of the Bellwether Enterprise Raleigh office, told MHN. Agusta arranged the financing for the deals. “One was selling the concept of paying off debt on an entire portfolio based on the collateral of only three properties. However, once it was understood that the value of these three properties was enhanced by the rest of the portfolio sharing their operating subsidies, FHA was amenable to the concept. The most challenging aspect of the transaction was carving out land in some of the existing collateral to be used for land swaps and future development. We had to balance the Charlotte Housing Authority’s desire for flexibility to maximize the use of excess land without negatively impacting the existing tenants. At the end of the day, Bellwether Enterprise managed the process that led to an arrangement that protects FHA’s collateral while giving the CHA the flexibility it needs to promote its mission.”
The need for affordable housing is growing at a very rapid rate nationally. Therefore, preserving and upgrading affordable housing stock must be prioritized, said Bellwether Enterprise president Ned Huffman. “The Bellwether Enterprise team has carved out a name for itself as industry experts that are committed to maintaining and creating affordable housing options for all individuals in need no matter who they are, where they live, or what their circumstances are,” he added.
“We are proud to be a part of this project, which will help maintain three public housing properties that serve key Charlotte communities in need, including seniors, families and individuals with disabilities.”
Two deals, three properties
Bellwether Enterprise closed two deals. A total of three properties was involved.
- Southside Homes, a $24.15 million affordable housing refinancing loan for a 381-unit property in Charlotte’s South End serving seniors, families and people with disabilities.
CHA Towers, an $18 million affordable housing refinancing loan for the following two multifamily properties.
- Edwin Tower, a 176-unit Uptown Charlotte property serving senior citizens.
- Charlottetown Terrace, a 161-unit property in Charlotte’s Dilworth enclave.
“The arranged financing for these three properties showcases a creative and innovative approach to the RAD program,” Agusta said. “Both loans allowed Charlotte Housing Authority to shift rental subsidies to three properties in return for paying off portfolio debt and funding reserves significantly reducing transaction costs associated with a large portfolio conversion. The transactions were also structured to maintain flexibility for future development of critical affordable housing on the property sites.”