Funding affordable housing projects can be extremely complicated. That’s why developers and sponsors need a partner that can help them put together financing packages.
One example of such a financial partner is Cleveland-based KeyBank. “We all know that affordable housing is in short supply,” says Jeff Rodman, co-head of KeyBank’s commercial mortgage affordable housing platform. “With this being a core line of business for KeyBank, we're always searching for ways that we can play a bigger role.”
What affordable housing developers and sponsors need is a financial institution that can handle complicated transactions. KeyBank, for instance, has a dedicated financing infrastructure that is committed to affordable housing that can handle the most complex transactions while at the same time provide quick closings for Fannie Mae, Freddie Mac and FHA/HUD. These can include financing for acquisitions, cash-out refinances, moderate rehabilitations, workforce housing and LIHTC deals. Additionally, numerous other capital providers are working through KeyBank to supply the capital that the affordable housing industry needs. Its requisite expertise in the affordable housing space pools these capital sources together along with a nationwide balance sheet and a LIHTC equity platform to be as meaningful to its customers as it can be.
One set of tools that KeyBank can use is its mortgage banking capability. “This is financing with its various investors including Fannie Mae, Freddie Mac, FHA/HUD, private placement investors as well as other third-party capital providers. This can be for new construction, substantial rehabilitations or stabilized assets,” Rodman says. We customize these products to our customer’s needs with variable rate and fixed rate options and also have the ability to do early rate locks and rate buy-downs.
In addition, “we can structure our off-balance sheet debt products to be used either with or without KeyBank construction loans,” notes Al Beaumariage, co-head of KeyBank’s commercial mortgage affordable housing platform. “In many cases, we can utilize completely off-balance sheet construction-to-permanent products, depending on the needs of the transaction. We've amassed a pool of capital providers that will invest in our private-placement executions and offer very competitive terms. There is high demand for loan volume from capital providers that want to invest in affordable housing and Key is responding.”
“With our deep bench of affordable housing expertise, we continue to attract new investors that want to provide capital but need an enterprise that can help them deploy it in an efficient manner,” Rodman adds. As a result, KeyBank can “surround” a project with front-end financing as well as long-term back-end financing.
This year, KeyBank has worked on more than 80 affordable housing deals. In one example, KeyBank helped Hampstead Development Partners, a national affordable housing developer, to acquire and renovate Salem Manor, a 64-unit community in Salem, Oregon. Hampstead’s renovation plans, which are now nearly half complete, include kitchen and bathroom updates, accessibility improvements in several of the units, and upgrades to windows and electrical systems. The financing package that KeyBank constructed includes a $3.69 million equity bridge loan and $6.3 million in LIHTC equity investment. KeyBank also arranged $10.4 million in permanent financing through Freddie Mac. “Our integrated platform enables us to provide our clients with financing solutions that are complementary to each other and provide a one-stop shop that ensures maximum proceeds to the development,” Beaumariage says.
To learn more about how KeyBank’s expertise can help make affordable housing projects happen, visit us at key.com/affordable.
