Hunt Mortgage Partners announced it is providing financing for the acquisition and moderate rehabilitation of an affordable housing community in Portsmouth, Va. The total investment is $4.7 million.
The property being acquired is Dale Homes Phase I, which consists of a single parcel containing 146 units. The loan has an 18-year loan term, with two-year interest-only payments, and a 35-year amortization schedule beginning in year three.
The overall development had been built in 1940 as a 296-unit public housing development by the Portsmouth Redevelopment & Housing Authority (PRHA). Phase I is comprised of 38 one-bedroom, 72 two-bedroom, 28-three bedroom, and eight four-bedroom units. Future renovations for the 150 additional units at the project, known as Phase II, are in the works, but they are not proposed collateral for this Freddie Mac loan.
Hunt Mortgage Partners is a wholly owned subsidiary of Hunt Mortgage Group and a leader in financing commercial real estate throughout the United States.
Hunt Development Group is the turnkey developer for the project. PRHA and TCG Development Advisors (The Communities Group) are the project sponsors.
Alden Capital Partners, LLC, provided $7.4M in low-income housing tax credit (LIHTC) equity thru its multi investor fund Alden Capital Partners Tax Credit Fund 20.
“Dale Homes will be part of the Rental Assistance Demonstration (RAD) program in which its public housing units will be converted to project-based Sec. 8 housing with a 20-year HAP (housing assistance payment) contract in place at closing for 100% of the units,” said Joshua Reiss, assistant vice president at Hunt Mortgage Group.
“The property will remain affordable housing relying upon LIHTC financing, and other sources, to finance the rehabilitation of the property,” Reiss said. “By converting through the RAD program, the property receives two 20-year project-based rental assistance contracts thereby preserving affordability for the next 40 years.”
"Working with Freddie Mac to finance this property enables us to leverage our collective strengths to develop high-quality affordable housing,” added Reiss. “The RAD program is transforming public housing and brings unprecedented benefits to local communities throughout the country. The program enables the use of public and private investments to help revitalize and preserve much needed affordable housing.”
In addition to the Freddie Mac mod-rehab loan, Towne Bank of Chesapeake, Va., will provide a $6.3 million bridge loan to be advanced and then repaid by the receipt of LIHTC equity at construction completion. This loan will bridge the tax credit equity during the construction period.