Hudson Realty Capital Launches $800M Loan Program
The bridge-to-HUD program is for market rate, affordable and senior housing projects.
FHA/HUD lender Hudson Realty Capital has launched a bridge-to-HUD loan program for market-rate, affordable and senior housing projects. The program targets middle-market transactions for acquiring, constructing, stabilizing and rehabilitating multifamily investments.
Hudson Realty Capital anticipates lending some $800 million over the next 36 months through the program. Rich Ortiz, co-managing partner of the firm, told Multi-Housing News that he is pleased with the responses that the firm has so far received to the new bridge to HUD loan program.
“Given the recent spike in the U.S. 10-year Treasury and concerns about inflation pushing back up, this product’s flexibility makes it a timely and cost-effective way for owners to adapt to evolving market conditions and meet their investment goals while we wait for the return of long-term financing options,” Ortiz said.
Hudson Realty Capital has already issued $153 million in term sheets to facilitate the acquisition of a 330-unit property in Colorado Springs, Colo., the purchase of a 300-unit property in Denver and the refinancing of a 200-unit property in Philadelphia. It is currently reviewing $83 million in loan applications for multifamily properties in Kansas City, Mo., San Antonio, Texas, and Newtown, Conn.
The program is tailored to owners seeking permanent HUD financing but first needing to stabilize property operations. The loans are fully prepayable with no lockout period.
A popular financing route
Multifamily fundamentals have remained strong throughout the year, despite some financing challenges. Michael Romer, counsel at Romer Debbas, told MHN that this type of loan program can solve a timing issues that many multifamily investors face. HUD loans can take two to three times as long as a conventional Freddie Mac or Fannie Mae program financing while bridge loans only take some 45 to 60 days to close.
“The bridge to HUD program is the creative solution to this timing problem and enables investors to obtain financing to acquire the asset quickly while the HUD loan process plays out—at which point the HUD loan will replace the bridge loan,” Romer said. “Not only is this a popular route for the investor looking to secure the asset, but it often solves another problem involving properties needing repair—enabling investors to make funds, complete repairs and reach necessary occupancy rates to satisfy stringent HUD requirements.”
Justin Land, CEO of Merchants Mortgage and Trust Corporation, told MHN that he’s seen some interest in bridge lending programs among his borrowers in western states, but not enough to develop a specialized product.
“Other lenders in the space will be closely watching the success of this program and may decide to offer similar products in the future,” Land said.
