CPC Mortgage Closes $106M Loan for Michigan Affordable Portfolio
The financing will be used to acquire and preserve more than 1,600 units across the state.
CPC Mortgage Co., a subsidiary of The Community Preservation Corp., has provided $105.7 million in financing to Ginosko Development Co. and L+M Development Partners to acquire and preserve 1,370 units of affordable housing across seven properties in Michigan.
The properties were part of a portfolio of 1,640 affordable housing units spread among nine assets in Michigan acquired by GDC and L+M from an unidentified seller. More than half of the 1,640 units are for seniors, while seven have HUD Section 8 contracts and two buildings are restricted to households at or below 60 percent Area Median Income. The partners plan to preserve the affordability at all the properties, which are located in Detroit, Saginaw, Walker, Center Line, Monroe, Canton and Pontiac. GDC and L+M are planning to rehabilitate each community. Plans include renovating kitchens and baths, modernizing amenity spaces, upgrading mechanicals and improving the properties’ facades, landscaping and curb appeal.
CPC Mortgage Co. is providing a total of $58.3 million in first mortgage financing through Freddie Mac’s Targeted Affordable Housing product on four of the properties along with $8.1 million of CPC subordinate debt. As a non-profit Freddie Mac seller/servicer, CPC Mortgage Co. can also provide subordinate financing behind Freddie Mac first mortgages to support affordable housing preservation. CPC Mortgage Co. is also providing approximately $39.3 million in financing through Freddie Mac’s Targeted Affordable Housing product for three additional properties.
The properties CPC Mortgage Co. provided financing for are: Lexington Village, Detroit, 350 total units, 200 for seniors; Birch Park, Saginaw, Mich., 120 units; Coventry Woods, Walker, Mich., 100 units, all seniors; Lawrence Park, Center Line, Mich., total 252 units, 126 for seniors; Charring Square, Monroe, Mich., 200 units; Lincolnshire, Canton, Mich., 147 units; and Phoenix Place, Pontiac, Mich., 201 units, all seniors.
The remaining properties acquired in the portfolio by GDC and L+M are: Art Center, Detroit, 60 units; and Greenhouse, also in Detroit, 209 units for seniors.
GDC is one of the awardees of Citi’s Emerging Manager Fund, an initiative aimed at preserving affordable housing while expanding opportunities for diverse developers. Four of the properties—Art Center, Charring Square, Lincolnshire Village and Phoenix Place—were purchased with equity from Citigroup’s Emerging Managers Fund and conventional debt through the Community Preservation Corp., Freddie Mac and Merchants Bank, according to GDC and L+M. The other five properties—Birch Park, Coventry Woods, Lawrence Park, Lexington Village and Greenhouse—were acquired using bridge financing from CPC, Freddie Mac and Merchants Bank, GDC and L+M stated. Those five will eventually be syndicated using 4 percent Low Income Housing Tax Credits through a tax-exempt bond issuance provided by the Michigan State Housing Development Authority, according to the partners.
Affordable Housing Missions
Amin Irving, founder, president & CEO of GDC, a minority and women-owned development firm, said in prepared remarks the deals represent the heart of economic and collaborative equality. Irving noted the team was comprised of a minority development company with the creativity and know-how to structure a portfolio in its own ‘backyard’ along with the additional financial wherewithal of L+M, CPC and Merchants.
Jeffrey Moelis, managing director at real estate development firm L+M Development Partners, said in a prepared statement the firm’s mission is centered around providing safe, high-quality and affordable housing and he was proud to extend that commitment to the Michigan portfolio. He thanked the financing partners for helping to advance the plan and said L+M looked forward to working with GDC to breathe new life into the nine properties and keep them affordable for their residents. L+M and its affiliate companies are responsible for more than $10 billion in development and investment and have acquired, built or preserved nearly 40,000 residential units in a variety of urban markets, including the New York tristate area.
GDC develops, acquires, repositions and manages affordable multifamily properties throughout the United States, primarily in the Midwest. Most of GDC’s 4,350-unit portfolio maintains regulatory income and rent restrictions.
In 2019, GDC was among five projects in Detroit selected by Michigan’s housing development authority for LIHTC awards totaling $6.2 million to help create and preserve 536 affordable housing units. GDC’s property, 7859 E. Jefferson, was a $23.7 million development that received two awards totaling nearly $1.8 million to keep all 150 units in the building affordable for 45 years.