Standard Communities has closed on the $110.3 million acquisition of a 151-unit affordable housing property in the Hell’s Kitchen neighborhood of New York City.
This transaction preserves the Polyclinic Apartments as affordable housing for the long term, with 150 units reserved for low-income families, according to officials at Standard Communities, the affordable housing division of Standard Property Co.
Converted to apartments in 1979, Polyclinic Apartments—a former hospital—features one-, two-, and three-bedroom units, as well as commercial space. The Department of Housing and Urban Development (HUD) assisted with the transaction, and 150 units at Polyclinic will be covered by a project-based Sec. 8 contract so residents will pay no more than 30% of their income on rent.
Walker & Dunlop (NYSE: WD) structured a $93.9 million loan with HUD, using the agency’s Sec. 223(f) program. The loan not only provides acquisition financing but also allows Standard Communities to make immediate repairs and fund future renovations.
In conjunction with the purchase, the new owner preserved the existing affordable apartments by renewing the property’s 20-year Sec. 8 contract and obtaining a 35-year Article XI tax abatement approval through the New York City Department of Housing Preservation and Development.
“This HUD transaction was unusual because it involved an acquisition, the negotiation of multiple different tax agreements, and coordination with several state and local government authorities,” says managing director Chris Rumul, who led the Walker & Dunlop team.
The transaction represents the multifamily housing lender’s first HUD forward-rate lock and its largest HUD financing of 2017.
Located on West 50th Street, between 9th and 8th avenues, Polyclinic Apartments is just blocks from Central Park. The property is in close proximity to mass transit, including the 50th Street Subway station, which is on the same city block.
The building was purchased from Starrett Corp.
“Acquiring and preserving this unique and well-located property as affordable housing when it was at risk of converting to a market-rate property was important to us,” says Scott Alter, Standard Communities’ co-founder. “We are glad that all parties were able to support the creative structure used to ensure these apartments remain affordable for years to come.”