TODAY’S DEALS: Red Capital Finances $70M New Construction Loan

San Francisco — Red Mortgage Capital, LLC is providing $70,000,000 in non-recourse FHA insured construction and permanent financing on a residential development of slightly more than $100 million in total development costs being built in downtown San Francisco.

Red Mortgage Capital LLC, is the mortgage banking arm of comprehensive capital provider Red Capital Mortgage Group and the lender that provided the most FHA insured multifamily loans in the nation this past year.

RED processed the $70 million FHA Section 221(d)(4) insured financing for 333 Harrison Apartments, which is located in San Francisco’s South of Market (SOMA) neighborhood, through the San Francisco office of the U.S. Department of Housing and Urban Development (HUD).

The project sponsor is San Francisco-based Emerald Fund Inc. (EFI), one of the nation’s premier real estate companies, who will develop and manage the property. Tom Azumbrado, director, HUD San Francisco Multifamily Hub, comments, “We appreciate that Emerald Fund and Red Capital are using HUD’s Section 221d4 mortgage insurance program to add quality housing to an up-and-coming neighborhood. The property is a transit-oriented development and has excellent energy savings features. The significant affordable component also promotes city, state and federal housing objectives.”

Construction of the union-built, seven-story 333 Harrison residential structure began in early July and will generate an estimated 600 jobs for members of the area’s building and construction trade unions. Of the 326 studio, one- and two-bedroom rental units that compose 333 Harrison Apartments, 15 percent (49 units) will be affordable to tenants earning no more than 30 percent of area median income. In addition, a contiguous parcel of land separate from the HUD-insured portion also was secured by the sponsor and will be developed as a green space/park area for use by residents and others living nearby in the community. The project is situated near the Transbay Transit Center, a major redevelopment project in the City which will be a mass-transit hub for the region’s public bus and rail systems.

In addition to serving as FHA mortgagee, Red Mortgage Capital LLC issued the Ginnie Mae mortgage-backed securities which were sold in the capital markets by affiliate Red Capital Markets LLC (member FINRA/SIPC), a registered broker-dealer. The GNMA MBS was offered through a competitively bid process and was purchased by the AFL-CIO Housing Investment Trust (AFL-CIO HIT) as the funding investor.

Alastair Mactaggart, EFI’s president states, “333 Harrison exemplifies how intergovernmental agencies and union labor can work together to create a major urban housing project. We are exceedingly grateful to HUD and the AFL-CIO Housing Investment Trust for working so well with us and to Red, for their expertise and for working so diligently on our behalf.” Since its founding in 1979, EFI has successfully completed development projects throughout the Bay-area representing a total value in excess of $2 billion. Their portfolio of managed properties includes over 800 rental residential units.

Liz Diamond, AFL-CIO HIT’s western regional director said, “The 333 Harrison project is the third new residential development that the HIT has helped finance in San Francisco in the last year and a half. These projects are creating much needed housing, community development, and union jobs in downtown San Francisco. With the hundreds of union workers to be employed on this project, the investment in 333 Harrison helped the HIT surpass its goal of creating 10,000 union construction jobs around the country through its Construction Jobs Initiative, which was launched in mid-2009 in response to the AFL-CIO’s call to action on high unemployment, especially in the building trades.”

Webcor Construction is the construction manager for the project. The architect is Christiani-Johnson Architects.

Anthony D. Cinquini, senior managing director of Red Mortgage Capital LLC and lead banker on the transaction comments, “It was our distinct pleasure to work with Emerald Fund, HUD San Francisco and the AFL-CIO HIT to deliver financing for such important housing and to create jobs along the way. All the participants worked long and hard on this complex transaction and Red is proud to have been a part of making it a reality. It will be a great asset to the local neighborhood and the City.”

Helios sells notes collateralized by NYC development site and townhome

New York—Helios Capital Advisors has completed two separate note sales, one collateralized by a development property and the other by a townhouse in the Upper West Side. A single investor bought both notes.

The vacant loft development property has 14,648 square feet above grade and maintains rights for the development of another 32,614 square feet. The unpaid principal balance is $5.5 million. The seven-unit townhouse is 5,757 square feet and has an unpaid balance of $2.3 million.

“Our clients realized the inherent value in these sites, as well as their future potential in the ever-evolving New York City real estate marketplace,” says Josh Malka, managing director at Helios Capital Advisors. “They moved very quickly to capitalize on the exceptional opportunities these two unique properties present.”

CPC finances rehab of two Harlem apartment buildings

New York—The Community Preservation Corporation has provided a $1.2 million construction loan for the rehabilitation of two 19th century apartment buildings located in Harlem’s historic Astor Row. The New York City Department of Housing Preservation and Development provided an additional $330,000 in financing to the CPC loan under the Preservation Participation Loan Program.

“This is another great example of our on-going partnerships with faith-based organizations to provide affordable housing for local families,” says Bruce Dale, senior vice president and director of CPC’s Manhattan/Bronx office. “With this particular project, we are delighted that we are preserving a landmarked property as well as housing.”

The buildings to receive a rehab are both three-story brick walk-ups located on West 130th Street between Lenox and Fifth Avenues. The row was designated a historic landmark in 1981. The buildings were built in the 1880s as a speculative development when the Astor family owned the land.