HPF Loans Closed
AEON, Inc.- Carrington Apartments- $3MM HPN/HPF Capital
HPN originated a high leveraged 95% LTV 3-year $2 million participation in an $8,700,000 acquisition loan led by Community Housing Capital (CHC), a colleague CDFI. In addition, HPF originated a second loan, a 3-year $1 million unsecured Enterprise Loan to first provide immediate project working capital to be used as equity in Carrington Apartments including immediate unit repairs and to support holding costs until Carrington Apartments is repositioned and achieves permanent financing. The Enterprise Loan is designed to support Carrington Apartments but as that project cycles to permanent financing and the acquisition loan repays the $1 million Enterprise Loan will be used to support Aeon’s other real estate development activities.
Aeon is using the combined loan proceeds to preserve Carrington Apartments, a 128 unit naturally affordable rental housing development in the Minneapolis, MN suburb of Brooklyn Center. Built in 1965, this existing rental housing was in imminent danger of being converted to market rate housing by private sector developers by simply updating and replacing the unit’s original kitchens and baths. By maintaining as-is and improving modestly over time, Aeon will gradually increase rents up from the current 50% AMI rents to 60% AMI rents.
What makes this project unique is Aeon’s commitment to completely eliminating current tenant displacement by phasing in rental increases of 5% per year up bringing the project to 60% affordability. When coupled with a phased reduction in real estate tax savings over two years, the project presents initially with negative operating earnings increasing to positive and then robust over several years.
Wesley Housing Development Corporation- Arden Apartments- $7.1MM
HPN originated a $7.1 million loan to acquire and leverage WHDC’s favorable long dated purchase price with the help of our colleague CDFI’s, Capital Impact Partners (CIP) and Virginia Community Capital (VCC). Wesley Housing Development Corporation (WHDC) used proceeds to purchase a 14-unit rental on 1.04 acres in Alexandria VA for redevelopment into a mixed use 126 affordable rental development contained in two adjacent 7 story buildings utilizing both 9% and 4% LIHTCs.
WHDC had a purchase and sale agreement on the property that had been extended several times and locked in a substantial discount on the purchase price but only gave WHDC 45 days to acquire once they received the tax credit subsidy award. WHDC needed a committed high leveraged (90%) acquisition loan from a lender who could fund a loan of this size, be willing to be patient until award announcement, and then move quickly to close in 45 days. Other lenders were either too small to finance the acquisition or unwilling to commit until the project was a “go” with funding. HPF, with our colleagues, CIP and VCC, were glad to support WHDC. WHDC received the credits and successfully purchased the project and used the high leverage to fund Arden’s preconstruction expenses. Construction start on this much needed 128 units is estimated for mid-2019.
Champlain Housing Trust -Cambrian Rise Condominiums- $2.2MM
HPF originated a 3-year $2.2 million participation in a $4.4 million acquisition loan led by Community Housing Capital (CHC), a colleague CDFI. Champlain Housing Trust (CHT) will use the funds to purchase, as a package deal, 28 units in a newly constructed 107 mixed income residential condominium development in Burlington, VT. The 28 units will be completed in late 2019 or early 2020 and then immediately resold to moderate income individuals and families earning between 80% and 100% of AMI. These units, plus a LIHTC project separately developed by CHT, will serve as the affordable component in a master redevelopment plan of the former Burlington College, a 27.5-acre development site next to Downtown Burlington and adjacent to the Champlain River.
CHT needed the financing commitment for the 28 units as part of the private developer’s presale requirement allowing the developer the ability to obtain construction financing for the entirety of the 107 unit Cambrian Condo development. An additional requirement of the discounted purchase price which makes the units affordable was the requirement that CHT acquire all 28 units in a single package within 30 days of receipt of the certificate of occupancy. This flexible acquisition loan’s underwriting focused on CHT’s lengthy history of successful condominium development and the significant untapped demand for affordable for sale product in Burlington, VT.
Champlain Housing Trust- $1 million Enterprise Loan
Champlain Housing Trust (CHT) will use this 3-year unsecured $1 million Enterprise Loan to expand its real estate development pipeline specifically supporting predevelopment activities for both affordable for-sale and rental developments. The loan is structured as non-project specific and allows CHT maximum flexibility and decision making on when and how to use its additional RED line of business capital. This facility was originated with HPF participating partners National Housing Trust-CDF and Partners for the Common Good.