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Hunt Provides $192.2M in Acquisition, Rehabilitation Financing for Brooklyn Apartment Portfolio

Hope-Gardens-Apartments-Brooklyn

Hope Gardens, one of the seven properties in the Pennrose portfolio, totals 330 units.

NEW YORK CITY — Hunt Real Estate Capital has provided a $192.2 million financing package for the acquisition and rehabilitation of a 1,321-unit affordable housing portfolio located in Brooklyn.

The borrower was a joint venture between Acacia Network, Hunt affiliate and multifamily developer Pennrose and the New York City Housing Authority. The borrower will use portions of the proceeds to retire existing construction debt and fund property renovations and upgrades.

The portfolio comprises seven properties, all of which were built in the 1980s in garden-style formats in Brooklyn’s Bushwick neighborhood. Floor plans across the portfolio include studio, one-, two-, three- and four-bedroom units. Twenty percent of the units are reserved for renters earning 50 percent or less of the area median income (AMI), and the remainder are restricted to households earning 80 percent or less of AMI.

The renovations will include repairs and upgrades to landscaping, building exteriors, building interiors, lobbies, unit interiors and common areas. Rehabilitation efforts will also replace or upgrade the properties’ utility and elevator systems.

The transaction consists of two loans, one of which totals $118.5 million and the other totals $73.7 million. Both loans carry 30-year terms, fixed interest rates and 40-year amortization schedules. Both loans were sourced through Freddie Mac’s rental assistance demonstration program, a federal housing initiative that offers tax-exempt financing for the preservation of affordable housing assets.

“Freddie Mac and the New York State Housing Finance Agency (NYSHFA) created a new risk share program to reduce borrowing costs and promote increased proceeds to be used toward the essential rehabilitation of the portfolio,” says Joshua Reiss, vice president at Hunt Real Estate Capital and the originator of the transaction. “This highly efficient and competitive product will help create new pathways to financing affordable housing moving forward.”

The parties involved in the transaction noted that New York City continues to suffer a lack of affordable housing. To that end, in November 2018, Hunt secured $120.6 million in acquisition and rehabilitation financing for a 1,088-unit affordable housing portfolio located in the Mott Haven area of The Bronx.

— Taylor Williams

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