Dealmaker: Hunt Real Estate Capital, Freddie Mac Finance Affordable Housing Portfolio

Hunt Real Estate Capital, New York, provided $192.2 million in Freddie Mac financing for a 1,321-unit Brooklyn, N.Y. multifamily portfolio.

The portfolio included a $118.5 million Low-Income Housing Tax Credit transaction and a $73.7 million non-LIHTC transaction. Both 30-year loans came with 40-year amortization schedules. The loans were 30-month and 36-month Unfunded Forward Commitments for permanent fixed-rate financing in the form of Freddie Mac Tax-Exempt Loans.

The sponsor was a joint venture between the Acacia Network, Hunt affiliate Pennrose and the New York City Housing Authority. Redstone Equity Partners also provided LIHTC equity for the LIHTC transaction.

The properties in Brooklyn’s Bushwick neighborhood will undergo conversion through HUD’s Rental Assistance Demonstration and Section 18 disposition programs. Under the RAD program, NYCHA will transfer the portfolio to a partnership led by the sponsor. All 1,321 units will fall under a new auto-renewing 20-year Housing Assistance Payment contract.

“The Bushwick portfolio is being acquired and renovated under the Rental Assistance Demonstration program in which public housing units are converted to project-based Section 8 housing,” said Hunt Real Estate Capital Vice President Joshua Reiss.

The RAD program enables public and private investments to preserve affordable housing. With the new financing, the portfolio will undergo a $156 million, 30-month rehabilitation with a total construction contract. Of the portfolio’s 1,321 units, 760 units will receive project-based vouchers under Section 18 of the U.S. Housing Act and 557 units will receive project-based vouchers through the RAD program. There will be four units reserved for on-site staff.

Hunt also provided a $35.8 million Fannie Mae conventional multifamily loan to refinance 350-unit Doylestown, Pa. multifamily property Center Square Towers. The mid-rise apartment building dates to 1975.

Bryan Cullen, Managing Director with Hunt Real Estate Capital, said the borrower acquired Center Square Towers in 2014 using $25.7 million in acquisition financing from Hunt. “In 2016, we provided a supplemental loan totaling approximately $4 million,” he said.

The latest financing included a 10-year term with five years of interest-only payments.