Hunt Real Estate Capital has closed on the financing of a large Rental Assistance Demonstration (RAD) transaction involving 39 scattered-site properties and a community center building in the Mott Haven section of the Bronx in New York City.

A 51-unit development on East 140th Street in New York City is part of the 39-property portfolio that will convert from public housing to Sec. 8 housing under the Rental Assistance Demonstration program.
A 51-unit development on East 140th Street in New York City is part of the 39-property portfolio that will convert from public housing to Sec. 8 housing under the Rental Assistance Demonstration program.

The firm is providing a 30-year, $120.6 million taxable Fannie Mae loan to assist the portfolio, which contains 1,088 public housing units, with a rehabilitation and conversion through the federal RAD and Sec. 18 disposition programs, said officials.

The borrower is Betances RAD, LLC, which is comprised of an affiliate of the New York City Housing Authority and RDC Development. RDC Development is a joint venture between MDG Design & Construction and Wavecrest Management Team.

The portfolio is comprised of various building types ranging from two- to five-story walk-up buildings to six- to 20-story buildings with elevators and community facility spaces. The buildings were constructed between 1906 and 1974.

“The Betances portfolio will be part of the 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, vice president at Hunt Real Estate Capital. “With the new financing, the portfolio will undergo a significant rehabilitation over a 24-month period after closing with a total construction contract amount of $109 million.”

The unit mix includes studio, one-, two-, three-, four-, and five-bedroom units.

Upon conversion from public housing, residents will receive rental subsidies through two project-based Sec. 8 voucher contracts, each for a term of 20 years, with one contract covering the 738 units under the RAD program and a second contract covering the 350 units under the Sec. 18 program. The conversion will not impact the affordability to the existing residents, according to officials.

“Fannie Mae is committed to improving the quality of public housing in the United States through partnerships with DUS lender partners like Hunt Real Estate Capital,” said Bob Simpson, vice president, affordable and green financing, at Fannie Mae. “Public/private partnerships like these are great examples of what we can do to ensure that residents have safe, healthy, and affordable places to call home.”

The renovation will include the replacement of all flooring, kitchen cabinets, bathroom vanities, and tub enclosures. The construction work will be completed without displacement of residents and within four days of the start of work, according to Reiss.