Walker & Dunlop Structures New $22M Construction
- Feb 24, 2016
Bethesda, Md.—Walker & Dunlop Inc. structured a $22 million new construction loan for The Waters at Magnolia Bay, a garden-style, mixed-income apartment community located in Lincolnville, S.C., north of Charleston.
The loan was structured under U.S. Housing and Urban Development’s 221(d)(4) loan program coupled with short-term, tax-exempt bonds. Loan terms included an interest-only construction period followed by a 40-year fully amortizing loan. The debt service coverage ratio is 1.15x.
The reason Walker & Dunlop was chosen to structure the loan was “our high level of expertise with affordable housing using Low Income Tax Credits and Short Term Tax Exempt Bonds coupled with a HUD taxable loan execution,” Walker & Dunlop senior vice president Frank Baldasare told MHN. “W&D’s repeated demonstrated ability to provide certainty of execution with this financing structure provided the sponsor a timely closing and certainty of execution.”
Among the challenges confronting the firm, Baldasare said, were “timing and structure overlay of underwriting the taxable HUD 221(d)(4) loan in conjunction with the timing and approvals related to the issuance and closing on the tax exempt bonds, i.e. coordinating two loan capital executions simultaneously.”
“Understanding the complexities of both executions with the corresponding knowledge of both allowed for a smooth underwriting of the real estate, the flow of tax credit equity, the sale of tax-exempt bonds and the taxable HUD loan. In essence, [Walker & Dunlop offered] a thorough working knowledge of all aspects of the transaction to provide a closing within the timeframe of the sponsor.”
The Waters at Magnolia Bay is situated along U.S. 78, in an established suburban market southeast of downtown Summerville.
Spread across 14 acres, including four acres designated wetlands by the U.S. Army Corp of Engineers, the apartment community will feature 300 well-designed one-, two- and three-bedroom garden-style apartments.
Eighty percent of the units are rent and income restricted through the Low Income Housing Tax Credit (LIHTC) program.
The apartment community is designed for those families earning no more than 50 percent and 60 percent of the area’s median income.
A furnished clubhouse, business center with complimentary WiFi, swimming pool and state-of-the-art exercise facility are among the community’s top amenities.
A luxuriant outdoor setting features a playground, outdoor fitness center, picnic benches, and permanent grills. The Waters at Magnolia Bay will be energy certified, and all units have Energy Star appliances, including dishwasher, refrigerator and stove.
“With our knowledge of HUD and tax-exempt bond financing, Walker & Dunlop was able to provide Atlantic Housing Foundation an efficient, cost-effective way to utilize tax-exempt bond financing with four percent LIHTC, resulting in well-leveraged, long-term, low-cost-of-debt financing,” Baldasare said. “Walker & Dunlop has a wealth of knowledge about this specialized market at their disposal, which is an extremely valuable asset to our clients.”
Michael Nguyen, president and CEO of Atlantic Housing Foundation, commented, “We are very pleased with the exceptional level of service we received from Walker & Dunlop. The Walker & Dunlop team delivered a professional, well-organized process and a timely closing. Atlantic Housing is very excited to be able to bring much needed affordable housing and we look forward to serving the hard-working families in the Lincolnville, Summerville and North Charleston area.”