Orangewood Court & Coral Wood Court Apartments

||Orangewood Court & Coral Wood Court Apartments

Orangewood Court ApartmentsLove Funding, one of the nation’s leading providers of FHA multifamily and healthcare financing, announced the closing of its first two transactions under a new HUD pilot program designed to expedite processing times for the acquisition or refinance of affordable rental apartments with Low Income Housing Tax Credits (LIHTCs).

Love Funding Senior Director James Vanar of the Los Angeles office used this new program to secure two loans totaling $21.7 million to fund the acquisition of Coral Wood Court Apartments in Reseda, CA and Orangewood Court Apartments in Sherman Oaks, CA. The buyer of the two properties was WNC & Associates, an Irvine-based firm that has been active in the affordable housing industry since 1971. The loans were underwritten by Love Funding Chief Underwriter Denise Troeschel, who has decades of experience underwriting affordable housing loans.

The U.S. Department of Housing and Urban Development introduced the LIHTC pilot program last year to help preserve affordable apartment properties in select markets. It has since been expanded nationwide. The program, which dramatically accelerates HUD application processing and increases the allowance for renovation and repairs, is supporting the acquisition and rehabilitation of affordable housing properties across the country at a time when the shortage of such housing is growing.

Both Coral Wood Court and Orangewood Court set aside 10 percent of the units for households with incomes at or below 50 percent of area media income (AMI), with the rest of the units reserved for those at or below 60 percent AMI. HUD’s pilot program also applies to projects with Section 8 HAP contracts.

“HUD is dedicating a lot of time, energy and resources to make sure this program is a success, and the market is responding in force,” Vanar said. In the Los Angeles HUD office alone, there are 17 other LIHTC pilot transactions pending, he said.

Timing is a key benefit under the new program. In this instance, HUD’s Los Angeles office took only 25 business days to process the applications and commit to insure. Added up, total application handling time between Love Funding and HUD came in just over four months, less than half the time of a typical HUD construction loan. In addition, the pilot program increases allowable repairs tied to hard construction costs from $17,500 per unit to $40,000 per unit. Both properties involved in the transaction will take advantage of the new threshold, with renovations planned to upgrade the kitchens and bathrooms, repair roofing and other outdoor infrastructure, and replace carpeting, among many other improvements.

“We were pleasantly surprised with the timing of this transaction,” said Anand Kannan, Senior Vice President of Community Preservation and Finance at WNC & Associates. “The financing structure was complicated but we had the right team in place both on our side and on Love Funding’s side to make sure it was executed smoothly,” Kannan said.

The transactions also permitted WNC & Associates to re-syndicate 4 percent low-income housing tax credits on the two transactions through a relatively new financing structure that combines short-term, cash-collateralized bonds with the sale of taxable Ginnie Mae securities.

“We are seeing a lot of interest from the affordable multifamily community in this financial structure.” said Kent Neumann, a partner at the Washington D.C.-based law firm Eichner Norris and Neumann PLLC, which pioneered the innovative structure several years ago. “This structure allows the developer to benefit from the historically low taxable interest rates currently available in the capital markets while significantly reducing the amount of negative arbitrage typically associated with these transactions.”

In addition the pilot program, Love Funding also provides FHA multifamily financing using 4 percent and 9 percent LIHTCs for substantial rehabilitation and new construction.

For more information contact James Vanar at (949) 215-1682.

2013-07-22T21:05:49+00:00 Love Funding News|