Walker & Dunlop Arranges $36M Loan for Affordable Property

The financing was used to purchase and rehabilitate Lake Delray Apartments, a Class B community in Delray Beach, Fla.

Delray Beach, Fla.—Walker & Dunlop recently structured a $36 million Freddie Mac immediate delivery tax exempt loan (TEL) for Smith & Henzy Advisory Group to purchase and rehabilitate Lake Delray Apartments, a Class B, affordable community in Delray Beach, Fla.

The Lake Delray Apartments in Delray Beach, Fla.

The Lake Delray Apartments in Delray Beach, Fla.

Located at 700 Lindell Blvd., the lakeside property is situated on 14 acres in a residential neighborhood within West Palm Beach and Boca Raton in the Florida area. Lake Delray Apartments is near several senior services centers and a medical center. The community features 404 units, all designated for residents aged 62 and older. According to Yardi Matrix data, amenities include two swimming pools, a clubhouse, a fitness center and 620 parking spaces. The Delray Beach Housing Authority was the former owner after acquiring the property in 2016 for $35 million.

More than $14 million will be used to upgrade the apartments and improve living conditions, with upgrades including the replacement of all unit kitchens, baths, windows, flooring and mechanical systems. A 1,200 square-foot gym, yoga room, library with computer rooms, barbecue area and outdoor LED lighting will also be added. Most common area amenities will be renovated.

The loan was originally structured as a HUD cash-collateralized, short-term tax-exempt bond execution, but it was later converted to a Freddie Mac TEL program after more flexible terms were required. Walker & Dunlop’s senior vice president, Frank Baldasare, led the origination team that arranged the 17-year acquisition loan that provided for two years of interest-only payments followed by a 35-year amortization schedule. The Palm Beach Housing Finance Authority issued the tax-exempt loan, and the Delray Beach Housing Authority was the general partner to preserve the real estate tax abatement.

The Delray Housing Group managed the property and provided project-based vouchers and housing assistance payment contracts for 193 of the units. All remaining units are restricted to those who make 60 percent of the area median income.

Image courtesy of Yardi Matrix