Hunt Real Estate Capital has partnered with Fannie Mae to finance the acquisition and rehabilitation of more than 1,000 units of public housing in New York City with a $120.6 million loan, as part of a federal Rental Assistance Demonstration deal that will convert the apartments from public housing but still keep them affordable.
The multifamily portfolio, known as the Betances New York City Housing Authority RAD portfolio, consists of 39 buildings and one community center in the Mott Haven section of the Bronx. The portfolio, which has 1,088 units of existing NYCHA public housing, is comprised of various building types consisting of low-rise walk-ups to 20-story buildings with elevators. Constructed between 1906 and 1974, the buildings range from 46 units in one property to 309 units. The unit mix includes studios and one-bedroom units to five-bedroom units.
The borrower is Betances RAD LLC and the properties are identified at Betances I through Betances VI. Renovations will include replacing all flooring, kitchen cabinets, bathroom vanities and tub enclosures. Work will be done without displacing residents.
“The Betances portfolio will be part of the Rental Assistance Demonstration (RAD) program in which its public housing units will be converted to project-based Section 8 housing with a 20-year HAP contract in-place at closing for 100 percent of the units,” Joshua Reiss, Hunt Real Estate Capital vice president, said in a prepared statement. “With the new financing, the portfolio will undergo a significant rehabilitation over a 24-month period after closing with a total construction contract amount of $109 million.”
After they are converted from public housing, residents receive rental subsidies through two project-based Section 8 voucher contracts for a 20-year period, with one covering 738 units under the U.S. Department of Housing and Urban Renewal RAD program and a second contract covering 350 units under the Section 18 program, a HUD disposition program. Both will keep the units affordable for the residents for at least the next 40 years, Reiss said.
“Working with Fannie Mae to finance this property enables us to leverage our collective strengths to rehabilitate high-quality affordable housing where it is much need,” Reiss added.
“Public-private partnerships like these are great examples of what we can do to ensure that residents have safe, healthy and affordable places to call home,” Bob Simpson, vice president of affordable and green financing at Fannie Mae, said in prepared remarks.
More RAD Conversions Planned
The Betances portfolio transaction and conversion to the RAD program is one of several planned by New York City as it addresses nearly $13 billion in repairs needed at its NYCHA public housing sites. Renovations have already been completed at 1,395 apartments at the Ocean Bay (Bayside) complex in Queens and repairs are under way at the 7,600-unit Twin Parks West houses in the Fordham Heights section of the Bronx, according to the New York City Mayor’s office. More RAD conversions are planned in Manhattan and Brooklyn.
“These partnerships are one of our best-proven tools to deliver critical repairs,” New York City Mayor Bill de Blasio said in a prepared statement.
Image courtesy of Hunt Real Estate Capital