Bridge Multifamily Fund Manager and Freddie Mac Multifamily announced the closing of a transaction designed to voluntarily provide rental housing affordable to low-income and working families.
Specifically, Bridge and Wells Fargo closed their first financing under Freddie Mac’s MultiAsset Commitment with a focus on affordability, in which Freddie Mac will purchase and aggregate up to $500 million in loans over a one-year period to allow Bridge to acquire, improve, and preserve workforce and affordable housing nationwide.
The new effort is being done in conjunction with Wells Fargo and KeyBank.
After the one-year term, Freddie Mac will place the aggregated loans in a single securitization, for which Bridge will be required to purchase the subordinate bonds. Wells Fargo will originate $400 million of the commitment and KeyBank will originate the remaining $100 million.
Freddie Mac is using its existing MultiAsset Commitment structure to support social impact financing in an innovative way. This execution incentivizes Bridge, an affiliate of Bridge Investment Group, to keep rents affordable without relying solely on federal, state, or municipal affordable housing programs.
As part of the financing, Bridge has agreed that a majority of units in each property will be rented to those earning below 80% of the area median income (AMI)—and will remain that way for the life of each loan.
The first asset to be acquired within this vehicle, a 352-unit multifamily community in Plant City, Fla., has 82% of its rents affordable to those residents earning less than 80% of the AMI. This asset presents an opportunity for Bridge to preserve and rehabilitate a meaningful amount of affordable housing for the local Tampa workforce, according to officials involved in the deal.
The firms declined to disclose the name of the Florida property.
“This innovative financing commitment will allow Bridge to preserve and rehabilitate dozens of workforce and affordable housing properties in fast-growing markets across the U.S.,” said Robert Morse, executive chairman of Bridge Investment Group. “The integration of our value-add, in-house operating model with our focus on sustainability and social and community programming will allow us to create energetic, thriving communities and provide our residents far more than just ‘four walls and a roof.’”
The MultiAsset Commitment financing structure from Freddie Mac will allow Bridge to attain flexibility and competitive pricing on behalf of its workforce and affordable housing strategy. These borrower savings can in turn be passed onto residents in the form of quality-of-life improvements and the sustainability of affordable rents, while enhancing investor returns and providing a “double bottom line.”
At the Plant City property, Bridge plans to improve the unit interior and common areas, including a soccer field and revamped family areas, while also constructing an on-site social and community center with the aim of meeting resident needs and enhancing social mobility, run by its nonprofit partner, Project Access.
“This transaction is just the latest example of our drive to innovate so that our products support every corner of the multifamily market,” said David Brickman, executive vice president and Head of Freddie Mac Multifamily. “This commitment will ensure hundreds more affordable housing units will be preserved across the nation—and with it, a significant number of families will see relief from rising rents.”
“This pioneering transaction will bring much needed affordable housing to working families around the country, and Wells Fargo was pleased to play a role in this transaction as part of our ongoing commitment to helping meet the need for more affordable housing,” said Vincent Toye, a managing director and head of government-sponsored enterprise production at Wells Fargo Multifamily Capital.
“KeyBank is honored to be a part of this innovative initiative in a collective effort to preserve affordable housing across the country,” said Janette O’Brien, senior vice president and multifamily production manager at KeyBank Real Estate Capital. “We’re deeply committed to affordable housing production and this transaction will provide hundreds of families with much needed rental relief .”
Bridge Investment Group is a privately held real estate investment management firm with $10 billion in assets under management. Bridge combines its 1,000-person, nationwide operating platform with specialized teams of investment professionals focused on select U.S. real estate verticals, including multifamily, office, seniors housing, and affordable housing.