NEW YORK CITY — Lument has provided a $31.7 million HUD-insured loan for the refinancing of Lefferts Heights, an 87-unit affordable housing property located in the Clinton Hill neighborhood of Brooklyn. The property was built in 1974, and units range in size from 550 to 970 square feet. Josh Reiss of Lument originated the long-term, fixed-rate financing through HUD’s 223(f) program on behalf of the sponsor, Wavecrest Management. The financing includes proceeds to fund capital improvements.
OKLAHOMA CITY — Lument has arranged a $10.7 million loan for the acquisition of Bellevue Health & Rehabilitation, a 119-unit, 150-bed skilled nursing facility in Oklahoma City. The loan carries a five-year term, with a minimum of two years of interest-only payments, 25-year amortization schedule and a fixed interest rate. Bill Wilson of Lument arranged the loan through an undisclosed community bank. The undisclosed borrower will use a portion of the proceeds to fund capital improvements.
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Higher Interest Rates Cause Affordable Housing Values to Return to Old Norms
Rising interest rates dinging commercial real estate and multifamily assets have plunged low-income housing tax credit (LIHTC) properties back into reality, especially those coming to the end of their 15-year compliance periods. “There were some huge profits made in the affordable housing space over the last two or three years,” says Cliff McDaniel, a managing director with Lument, which is representing Harmony Housing in the $1.4 billion sale of its affordable housing portfolio to the Michaels Organization. “We sold a lot of properties for $60,000 a unit or even $120,000 a unit, and the debt was $40,000 a unit. But the mania over that type of profitability is over, and values are going back to where they were before.” Up until about five years ago, the phrase “huge profits” and “affordable housing” would rarely if ever have occurred in the same sentence. Or even in the same story. Prior to that, affordable housing properties typically had very little value at the end of their initial 15-year compliance periods, and limited partners who provided equity to the project by buying tax credits routinely agreed to sell their interest to the general partner for a nominal fee. At that point, the …
SOUTHLAKE, TEXAS— Lument has provided a $15.7 million bridge loan for the refinancing of a 91-bed seniors housing property in Southlake, a northern suburb of Fort Worth. The facility offers assisted living and memory care services. Doug Harper, Chris Mauger and Casey Moore of Lument originated the financing, which carried a 36-month term and a one-year extension option, on behalf of the borrower, California-based owner-operator Silverado.
HOUSTON — Lument has provided a $21.1 million bridge loan for the refinancing of Hermann Park, an 80-bed seniors housing property in Houston. The facility offers assisted living and memory care services. Doug Harper, Chris Mauger and Casey Moore of Lument originated the financing, which carried a 36-month term and a one-year extension option, on behalf of the borrower, California-based owner-operator Silverado.
AUSTIN, TEXAS — Lument has provided an $18.6 million bridge loan for the acquisition of Barton Springs, a 56-bed seniors housing property in Austin. The facility offers assisted living and memory care services. Doug Harper, Chris Mauger and Casey Moore of Lument originated the financing, which carried a 36-month term and a one-year extension option, on behalf of the borrower, California-based owner-operator Silverado.
AUSTIN, TEXAS — Lument has provided a $17.4 million Fannie Mae loan for the refinancing of Riverside Meadows, a 240-unit affordable housing complex in Austin. The 10-building community was constructed on 14.5 acres in 2002. Steve Beltran of Lument originated the financing, which was structured with a 10-year term, fixed interest rate and a 30-year amortization schedule. The undisclosed borrower plans to use a portion of the proceeds to fund capital improvements to the unit interiors, building exteriors and common areas.
BROCKTON, MASS. — Lument has provided a $15 million HUD-insured loan for the refinancing of Alliance Health at West Acres, a seniors housing property located in the southern Boston suburb of Brockton. Built in 1965 and renovated in 2017, the property offers 130 beds. Aaron Becker of Lument originated the financing, which was structured with a 35-year term and fixed interest rate, on behalf of the owner-operator, Alliance Health & Human Services.
By Colin Grayson, Lument If you consider multifamily real estate assets to be a good investment, you are in good company. At mid-year, asset managers and private equity firms alone held an estimated $325 billion of levered dry powder set aside for this purpose, enough cash to finance nearly every acquisition closed in the United States in 2021, the highest investment sales volume on record. Despite nearly unanimous support for the asset class, however, multifamily transaction volume in the third quarter slumped year-over-year for the first time since the peak of the pandemic. The mainspring was a sharp rise in mortgage financing costs triggered by high inflation and the Federal Reserve’s commitment to raising rates to bring it under control. Generic rates for 65 percent loan-to-value (LTV) first mortgage debt stood on 5.71 percent at the end of November, representing an increase of 248 basis points since the beginning of the year. Even as financing costs soared, asset pricing changed very little. Initial net cash flow yields of transactions closed in the third quarter of 2022 averaged only 4.6 percent, according to Real Capital Analytics, an increase of 10 basis points from second-quarter 2022 levels. At the same time, cap …
CHICAGO — Lument has provided a $73.4 million Fannie Mae loan for the refinancing of a 47-building, 793-unit multifamily portfolio located on the South Side of Chicago. Nicholas Diamond of Lument originated the loan on behalf of the borrower, Chicago-based Icarus Investment Group. Jonathan Bodner of Two Bins Capital arranged the loan. The transaction utilized Fannie Mae’s Structured Adjustable-Rate Mortgage product, which enabled the borrower to consolidate six loans — several bank loans, a bridge loan and an agency loan — into a single Fannie Mae loan. The loan features a 10-year term, five years of which are interest-only payments, and a 35-year amortization schedule.
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