TODAY’S DEALS: Greystone Closes $43.7M Affordable Transaction in Alabama

Greystone has closed a $43.7 million affordable housing transaction in Alabama; NorthMarq secures $103.7 million for a Texas portfolio; and Berkadia structures $55 million for the construction of a multifamily property located in a master-planned community.

New York—Greystone has closed a $43.7 million affordable housing transaction in Alabama. The 13 aged USDA Rural Development Section 515 properties, consisting of 398 apartment units serving low-income households in 10 counties across the state, are owned and operated by ARD Inc. The construction phase of the rehabilitation is expected to be completed within seven months with residents in place.

“Affordable housing communities across the U.S. are showing significant age and many are in need of extensive rehabilitation and modernization. Combining this fact with increased state and federal budget constraints has made preservation of existing affordable housing stock even more of a challenge,” says Tanya Eastwood, managing director and head of Greystone’s Affordable Housing Initiatives Group. “With little investments being made in construction of new multifamily affordable housing properties across rural America, renovating the already shrinking housing supply is more critical than ever.”

The financing plan combined both public and private funding, and included:

  • Tax Exempt Bonds – Issuance of $13.8 million in multifamily private activity tax exempt bonds by the Alabama Housing Finance Authority. The short-term bonds were issued as a public offering facilitated by Merchant Capital and credit enhanced by Ginnie Mae.
  • LIHTC – Purchase of 4 percent Federal LIHTCs by Boston Financial Investment Management, generating more than $7 million in capital contributions.
  • RHS 515 Debt – Assumption and subordination of $10.1 million of original USDA RD Section 515 debt. The Section 515 program is a direct loan program designed to provide subsidized loans to developers of affordable housing in rural markets. In addition, of the 398 apartment units, 82 percent continued to receive Section 521 Rental Assistance provided by the USDA Rural Housing Service.
  • Senior Debt of $11 million – Long-term debt comprised of a combination of USDA guaranteed 538 loans and new USDA 515 loans were issued.
  • Other – Other funding sources included additional financial support of $1.45 million.

The rehabilitation plan consists of substantial improvements for all 398 units. Sample planned interior improvements include new flooring, energy-efficient appliances, hot water heaters, upgraded HVAC, kitchen cabinets and countertops, as well as fixture upgrades. Exterior improvements include new insulated double-pane windows, doors, gutters, siding, a new roof system and landscape enhancements.

NorthMarq secures $103.7M for Texas portfolio

Texas_NMPearland, McKinney & Katy, Texas—Greg Duvall, senior vice president and managing director in NorthMarq’s Kansas City regional office, has negotiated a $103.7 million refinance for three Texas apartment communities. The portfolio contains 872-units that are located in Pearland, McKinney and Katy, Texas. The financing was arranged for the borrower via Freddie Mac.

“The borrower was looking to refinance their existing bank debt and pull out some cash equity on these assets,” says Duvall. “Freddie Mac did a great job of providing very attractive loan terms on this pool of newly constructed and recently stabilized, class “A” multifamily assets. Two of these assets were financed with 10-year fixed rate loans with five-years interest only. The third asset was financed with a seven-year variable loan with three-years interest only.”

Berkadia structures $55M for construction of multifamily property 

Dallas—The Dallas office of Berkadia Commercial Mortgage LLC recently arranged $55 million for the construction of Discovery at the Realm, a multifamily community that will be located in Lewisville, Texas.

Senior Vice President Joseph N. Hevey worked with borrower Bright Realty to secure the three-year, interest-only financing through lead lender Mutual of Omaha Bank, who provided $43 million in senior debt, Great Southern Bank of Springfield, Mo., which participated in the construction loan, and Cornerstone Real Estate Advisers LLC, which provided $12 million in mezzanine debt.

Bright Realty will be breaking ground on Discovery at the Realm—a Class A property located at the southeast corner of Windhaven Parkway and Castle Hills Drive, approximately 25 miles north of Dallas—this month. The community will consist of 423 units developed across three buildings on more than 20 acres of land. Total project costs will be in excess of $75 million.

“We were able to generate numerous attractive financing options given the fundamentals behind Bright Realty’s project: strong sponsors, a tremendous location within the highly successful master-planned community of Castle Hills, easy access and high visibility to the Sam Rayburn Tollway and the explosive growth within the sub-market,” said Hevey. “Once we laid out all of the financing options with the borrower, we were able to identify and execute on what best fit their needs in a short timeframe.”

Discovery at the Realm is Phase I of a planned multifamily community within Castle Hills. The urban-inspired development will provide a unique, luxury multifamily operation offering resort-style living for its residents. The first available units are planned for a February 2016 delivery, with all Phase I units planned for an August 2016 delivery.

The development team for the property includes BB&M Architecture of Charlotte, North Carolina, and Andres Construction of Dallas will serve as general contractor.

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