September 1, 2015
By Michael Tucker
Apartment rents maintained their bullish growth in August, rising by $7 to a record $1,162, reported Yardi Matrix, Englewood, Colo.
“Perhaps more importantly, the numbers in August matched July’s 6.5 percent year-over-year increase, which indicates that rent growth does not seem to be slowing down,” said Yardi Matrix Vice President Jeffrey Adler.
But Adler said recent stock market volatility will pose a “significant test” to the apartment sector. “Although the major causes of the sudden 10 percent decline in stock values–the collapse of stock prices and currency depreciation in China, slower growth in emerging markets and fears that U.S. stocks were overvalued after a bull run–are not directly related to real estate, recent history demonstrates that exogenous shocks can play an outsized role in roiling the U.S. economy,” he said.
Posted in Industry News.
August 25, 2015
Love Funding, Washington, D.C., closed a $15.3 million loan to renovate a city block in downtown Cleveland to accommodate a new loft apartment community.
When completed, West 25th Street Lofts will offer 83 market-rate loft apartments in four adjacent buildings in Cleveland’s Ohio City neighborhood, including one constructed in 1866 to house the Jacob Beahr Brewery.
Love Funding Midwest Regional Director Bruce Gerhart secured the financing through HUD’s 221(d)(4) loan insurance program and federal and Ohio state historic preservation tax credits. HUD’s program provided the development team with low-rate non-recourse financing for construction and a subsequent 40-year term. The project also tapped two City of Cleveland funding programs.
July 13, 2015
Love Funding, Washington, D.C., closed a $10.1 million refinancing loan for Court Square Center, a mixed-use development in downtown Memphis, Tenn.
Love Senior Director Artin Anvar secured the financing through FHA’s Section 223(f) loan insurance program.
“FHA’s 223(f) program is a non-recourse and fully assumable program,” Anvar said. “In this case it gave the borrowers a 35-year loan below 4 percent with 35-year amortization. The program allows leverage up to 83.3 percent, which also interested them.”
The new loan enabled the borrowers to pay off debt taken out to redevelop the property and preserve its historic character. Court Square Center was co-developed by the Memphis development team of John Basek, C. Yorke Lawson and consulting firm Chandler and Chandler, who worked with Telesis Corp. and New Community Partners, both of Washington, D.C.
June 29, 2015
by Peter Wessel
Over the past several years, market-based rental rates have crept up with construction costs. Not so for affordable rental units, though, because they are capped based on low and moderate incomes that have not risen commensurately. This mismatch has resulted in an increasing gap between the cost of developing a new affordable apartment project and the ability to finance its development.
Fortunately, there are a couple of new tools available to affordable housing developers to close the funding gap. They are not perfect but they can be viable solutions to help develop or preserve affordable properties – so long as you know how to navigate their complexities.
June 11, 2015
Senior Director Robyn Cunningham and Director Adrian Hartman will be attending the National Apartment Association’s Education Conference & Expo June 24-27, 2015 in Las Vegas, NV. Join Robyn and Adrian at booth #1528 to learn about the many financing options available through FHA’s multifamily finance programs.
Posted in Industry News.
March 12, 2015
Our elected leaders on both sides of the political aisle are going to have a lot to say about President Obama’s proposed federal budget in the weeks and months ahead. But one area is likely to continue escaping attention in the wake of the proposal’s release: the availability of affordable rental housing.
The president’s budget request would increase funding for the Department of Housing and Urban Development – the agency tasked with providing American housing options and assisting community development – by $4 billion, or 8.7 percent, above current levels. The casual observer might assume the lion’s share of this increase will go to helping more Americans buy their own homes. On the contrary, the majority of the hike will go to fund programs that help renters afford to put a roof over their head.
March 10, 2015
There is a problem with the U.S. housing market that few are willing to admit.
The country is experiencing job growth, unemployment rates have dropped and hourly wages have started to increase for lower-income workers. The overall U.S. economy has mostly recovered from the 2007-2009 recession. The housing sector has not.
It’s time for a new conversation about U.S. housing policies.
The U.S. Department of Housing and Urban Development’s goal in 2015 is to increase homeownership rates. But, there is a distinct possibility that homeownership rates will never return to their pre-recession levels given the number of young Americans who either cannot or will not buy homes.
Posted in Industry News.
March 6, 2015
On March 6, 2015, Tim Gruenes, Director of Asset Management, Office of Residential Care Facilities, at HUD released a memo to all section 232 lenders/servicers, borrowers and operators.
- Quarterly balance sheets and income statements are required for all Section 232 FHA-insured projects.
- If you operate on a calendar year, the reports must be sent to the Lender (via the online 232 Healthcare Portal or email) by May 31 for the first quarter of 2015.
- The financial statements should be quarterly fiscal year-to-date and reflect operations at the facility level.
- You will receive an email by March 9th to register for an online training about the 232 Healthcare Portal that may be used to submit the financial statements.
To read the entire memo, click the image below. Please contact firstname.lastname@example.org to learn more.
Love Funding Asset Management
Posted in Industry News.
January 30, 2015
Love Funding, Washington, D.C., arranged $35.8 million in FHA financing for Maryland, California and Texas assets.
Laura Saull-Smith, senior director in Love Funding’s Washington, D.C. office, originated a $20.7 million refinancing for Paddington Square Apartments, a 165-unit community in Silver Spring, Md. The 223(f) financing enabled borrower Paddington Square Development Corp., to lock in a fixed non-recourse 35-year loan and consolidate outstanding debt.
“Paddington Square, which was built in 1960, is an affordable/market-rate rental property operating under the Housing Innovations Fund program offered by the Montgomery County Housing Opportunities Commission,” Saull-Smith said. As a result, the property reserves 40 percent of its units for of low- and moderate-income families, she added.
Paddington Square Development Corp. acquired the property in 2004 and received approval from the Housing Opportunities Commission to conduct a $5.6 million renovation including electrical upgrades, replacement of all HVAC systems and central water heaters and roof replacement. The Housing Opportunities Commission also approved a second rehabilitation phase in 2009, raising the total commitment to $11.2 million.
January 28, 2015
The HUD Rental Assistance Demonstration (RAD) program is entering its second major phase with a full head of steam. The program’s initial cap of 60,000 units has tripled and now sits at 185,000. What’s more, the proposed 2015-16 federal budget would impose no limit at all on the program going forward.
The rising popularity of the program speaks to its effectiveness as a means of converting the public housing stock of this country to private ownership. The driver is the program’s design: Allowing existing subsidies the projects are receiving through housing authority budgets to be transferred to direct rent payments. This enables private investors to take part in recapitalizing and modernizing the rental housing inventory by partnering with PHAs. They can finance the improvements with market rate debt, Low Income Housing Tax Credits (LIHTC), and/or other state or local subsidies when they are made available.
In addition, the cost of that capital is particularly enticing. The market rate financing is most often insured with FHA multifamily mortgage insurance, which results in very low interest rates. This incentivizes investors to borrow as much as they can to maximize the repairs and improvements and boost their own returns.
Posted in Industry News.
December 23, 2014
by Mark Dellonte via Washington Examiner
This year, a higher level of attention has been brought to a group of Americans who deserve our appreciation but often don’t get the kind of thanks they truly need.
Throughout the country, veterans are struggling with issues few of us can fathom. Many face not only physical and mental challenges upon returning home from conflict, but pressing financial concerns as well. It may shock you to know that nearly 50,000 veterans across the United States are homeless.
October 9, 2014
Tucker, Michael–Oct. 9 , 2014
Love Funding, Washington, D.C., secured $10.9 million through HUD’s 223(a)(7) program to refinance two market-rate Knoxville, Tenn. apartment properties.
Senior Director Tammy Tate of Love Funding’s Knoxville office secured the 35-year loans for Baco Realty Corp., which owns and manages Meadowood Apartments and Sutters Mill Apartments as well as assets in California and Nevada.
October 1, 2014
Mark Dellonte, President and Chief Executive Officer of Love Funding, today applauded the U.S. Departments of Housing and Urban Development (HUD) and Veterans Affairs (VA) for awarding $62 million to help thousands of homeless veterans find permanent housing.
HUD today announced the department would grant $57 million to support 8,276 Tenant-Based Vouchers for privately-owned rental units, and $5 million for 730 Project-Based Vouchers (PBV) for existing newly constructed units in specific developments.
Posted in Industry News.
August 27, 2014
Many of us appreciate the role that affordable apartment properties play in providing housing to Virginians who wouldn’t otherwise be able to afford it, but few genuinely understand what goes into preserving those meaningful living quarters in the state’s affordable housing supply. It’s an information gap that needs to be closed soon: During the next five years, more than 25,000 affordable apartment units reserved for tenants with incomes at or below 60 percent of an area’s median income and financed by the Virginia Housing Development Authority (VHDA) will conclude their mandatory 15-year lockout period, the compliance period during which a property that received federal low-income housing tax credits (LIHTCs) must maintain a certain amount of affordable units. At that point, many owners may need to invest heavily to modernize their properties or sell them to offload the financial burden.
August 18, 2014
That is, assuming the seniors can even get into the city. Recently, the AARP (the American Association of Retired Persons) released a poll it conducted in 2013 with New York City seniors. According to the study, 35 percent of the 1.3 million soon-to-be seniors already say it’s extremely likely they will move out of New York City to retire. Another 29 percent said it’s “somewhat likely,” leaving only 34 percent saying they are sure they will remain in the Big Apple.
One of the big reasons to leave, the seniors said in the poll, is that they think they’ll be priced out of over 55+ rental housing. More than half of the seniors surveyed said they don’t believe that there will be enough affordable housing available by their retirement.
Continue reading Carr’s full article on NREI.
August 18, 2014
Many prognosticators think the great run in the apartment market is coming to an end. After performing incredibly well for the past four years,the tide is starting to turn against the marketplace.
Sweeping changes over the next two years are going to cause fundamentals in the market to weaken for the first time since 2009. Significant increases in construction activity, for example, are going to send a torrent of properties into the market over the next seven quarters. Of course, these changes won’t be uniform across the United States. So it’s critical to understand which markets are going to see the most challenges.
Posted in Industry News.
June 27, 2014
By Robert Carr
June 23, 2014
It’s a sure bet that the market-rate seniors housing pipeline will catch up to the retiring baby boom demand during the next two decades—supply usually follows abundant money—but what’s more uncertain is how the sector will fill the expected boom in need for affordable seniors living.
According to a recent housing survey from the MacArthur Foundation, more than 60 percent of respondents believe it will be very challenging for seniors to find affordable, quality housing when they need it. The survey was conducted in April by Hart Research Associates, with 1,355 adults and seniors contacted by phone. “The main message we gathered from this survey is that a majority of people don’t think the housing crisis is behind us,” says Rebecca Naser, senior vice president with Hart. “More than half of the respondents saying they had to make sacrifices to meet mortgage payments in the past three years. As they age, they believe it will get even tougher to find affordable housing.”
May 27, 2014
A St. Louis-based lender has secured a $7.49 million loan for Financial District Properties’ renovation of the landmark Union Arcade in downtown Davenport.
The loan’s closing was announced Friday by Love Funding, one of the nation’s leading providers of FHA multifamily, affordable and health care financing. The loan is part of the financing package for the $13.7 million project, which will convert the former office building into new housing.
Harry Cheatham, senior director of Love Funding’s St. Louis office, secured the loan through the U.S. Department of Housing and Urban Development, or HUD, insurance program for substantial rehabilitation and construction loans.
April 7, 2014
Declining housing affordability has received a lot of attention over the past few years, and deservedly so. We’ve seen rising home prices across the country continue to chip away at Americans’ ability to buy their own homes. Declining housing affordability has taken center stage in the national debate over whether it’s a wise move to unwind Fannie Mae and Freddie Mac, the government-sponsored enterprises that back 90 percent of U.S. mortgages.
But while this challenge is well understood, declining rental affordability hasn’t been as much of a hot-button issue. By 2020, more than one million apartment projects backed by low-income housing tax credits (LIHTCs) will come to the end of their compliance periods, making them eligible for a return to market-rate rents. This “LIHTC Ledge” threatens to exacerbate what is already a tenuous situation for the growing tide of renters who can’t find affordable accommodations.
March 10, 2014
Developers, owners, and lenders of multifamily projects financed with low-income housing tax credits (LIHTCs) recently received a major lift from the Department of Housing and Urban Development (HUD). The agency unveiled big changes to its LIHTC Pilot Program that are sure to allow more multifamily borrowers to avail themselves of HUD’s low rates and attractive terms.
A year and a half ago, HUD unveiled the program to test an accelerated approval process for the purchase or refinance of multifamily rental properties financed with LIHTCs. There was no mystery as to what motivated the agency: Part of HUD’s mission is to help preserve affordable housing solutions around the country, and it was facing the very real threat of more than 1 million LIHTC apartment projects leaving the affordable housing stock over the next decade as they come to the end of their compliance periods.
February 7, 2014
We are excited to see that Lucas Place Lofts is nearly finished! Love Funding provided $20.5 million in financing to convert this historic building into market-rate lofts. Check out this article published in the Kansas City Star…
January 2, 2014
Know the five common missteps that can complicate underwriting
by Denise Troeschel, senior vice president and co-chief underwriter, Love Funding
As published in Scotsman Guide’s Commercial Edition, January 2014
In recent years, multifamily and health-care property developers have flocked to loan-insurance programs run by the U.S. Department of Housing and Urban Development (HUD) as traditional financing options first became scarce and then failed to rebound from pre-crisis levels.
In fact, in fiscal-year 2012, HUD endorsed 158 new construction or substantial-rehabilitation multifamily projects, totaling $2.33 billion in loan volume. In addition, the Office of Healthcare Programs received 716 applications in fiscal-year 2012, a dramatic increase from the 224 received in fiscal-year 2008. Overall loan commitments for both the health-care and multifamily loan programs have increased from less than $5 billion in fiscal-year 2008 to nearly $20 billion in fiscal-year 2012.
Despite these increases, the HUD underwriting process remains challenging for many borrowers. With thorough preparation, commercial mortgage brokers can avoid unpleasant surprises that often lead to delays in funding. With the knowledge of what underwriters look for in HUD loans, brokers can save clients the shock of seeing their deals derailed by unexpected requests.
For decades, HUD has served essentially as the lender of last resort for many multifamily and health-care property developers. But as more borrowers have become familiar with the benefits of Federal Housing Administration (FHA) financing, they continue to come back for more. Because FHA loans are backed by the government, their interest rates are highly competitive. HUD’s programs allow for fixed, long-term financing — as long as 40 years for new construction. The loans also are nonrecourse, meaning the lender only can pursue the collateral put up to recover the loan in the case of default; the government must make up the difference.
This last attribute makes the agency especially diligent when agreeing to back a new loan. Commercial mortgage brokers and borrowers who have gone through HUD loan processing know how rigorous HUD underwriting standards are. But many borrowers making use of these important programs today are first-timers. They approach a HUD loan transaction much like they would an application for traditional financing, and soon grow frustrated and disappointed when the lender’s underwriter starts peppering them with questions.
But these questions are a good sign that your lender is working hard to anticipate what HUD is likely to ask once the application is submitted. It’s better to tackle any issues the lender identifies before the application is submitted because there is a real risk that any delays could be prolonged if HUD is the one asking the questions and you’re unprepared to answer them. With many borrowers interested in HUD financing these days, there’s always another application waiting in the wings. Sometimes, applications can be sent to the back of the line if all of the information needed isn’t readily available, adding weeks — if not months — to the wait.
It is important to realize that some of these mistakes are entirely avoidable. Commercial mortgage brokers can help borrowers navigate these programs by keeping the following five points in mind. They also should be prepared to correct them before they needlessly jeopardize their transactions.
1. Inadequate plans
Architects by nature are fastidious when it comes to providing details, but they often come up short in the plans they submit to HUD, particularly in areas pertaining to plan format, square-footage calculations, architectural agreement and signature details. Many times, the information provided is in direct conflict with the agency’s specific needs. HUD has an entire handbook devoted to architectural requirements, but the pages to dog-ear are the ones dealing with the myriad issues regarding accessibility.
According to the guidelines of the Uniform Federal Accessibility Standards and the American with Disabilities Act, each multifamily property must have a dedicated number of units that are accessible to those with mobility disabilities, in addition to a separate percentage of units adapted for auditory and visual impairments. These details must be expressed in the architect’s plans and specifications. In addition, the Fair Housing Act’s guidelines require all ground-floor units in walk-up apartments and 100 percent of units in elevator buildings must comply with FHA standards. The law also requires HUD multifamily properties to have a dedicated number of units that can be adapted to address accessibility in the future. Architects who aren’t experienced with HUD don’t understand these rules, and their plans are returned when they don’t comply, adding more time to the process.
2. Environmental lapses
Lead-based paint, asbestos, radon gas — these are but a few of the environmental issues that HUD takes seriously when reviewing a new construction or substantial-rehabilitation loan application. But still commercial mortgage brokers and borrowers occasionally submit applications where no due-diligence work around these kinds of potential dangers has been performed.
Posted in Industry News.