Love Funding Secures $19M for Multifamily Assets

Love Funding, Washington, D.C., secured $19.4 million to refinance and rehabilitate apartment communities in Austin, Texas and Deerfield Beach, Fla.

Laura Saull-Smith, Senior Director with Love Funding, secured $14.1 million through HUD’s 223(f) loan insurance program to refinance Huntington Meadows Apartment Homes, a 200-unit affordable apartment community in Austin, Texas. She said the 223(f) program enabled ownership group Decker Lane Partners LP, Austin, to lock in their rate for 35 years, fund a replacement reserve and free up more than $1 million to pay for repairs and upgrades. 

Decker Lane Partners purchased the 1998-vintage property last year and increased vacancy to nearly 100 percent. 

In Deerfield Beach, Love Funding closed a $5.3 million loan to rehabilitate a 96-unit apartment community and preserve its affordable status through a unique FHA program.

Stanley Terrace was built in 1969 as a traditional public housing development, but HUD accepted it into its Rental Assistance Demonstration program in 2014. HUD created the RAD program to convert public housing units to long-term Section 8 contracts, allowing the units to remain affordable to low-income households. 

Rather than having to apply annually for operation and management subsidies through the federal public housing budget, the property’s owner, the Deerfield Beach Housing Authority, can now convert those funds into Section 8 rental subsidies. This allows them to offer market rents because the Section 8 rental assistance makes the units affordable to the residents so the authority can operate the property with debt from net income like any other property owner.

Love Funding Midwest Regional Director Bruce Gerhart secured the loan through HUD’s 221(d)(4) Substantial Rehabilitation Program in combination with short-term tax-exempt state bonds from and 4 percent low-income housing tax credits. He said this was the first RAD conversion in Florida to utilize 4 percent credits and bonds. 

Additionally, Love Funding worked with its parent company, Midland States Bank, Effingham, Ill., to make a “one-day” loan to facilitate the release of the short-term bonds and to recognize the contributed value of the property from the Housing Authority to a new partnership. Gerhart called the technique necessary to make the transaction work and said a similar transaction is underway in New York. 

“Since its introduction, the RAD program has proven to be an effective financing mechanism to modernize public housing and place it on a market-based economic operation like all other rental housing,” Gerhart said. “Deerfield Beach Housing Authority recognized this and helped push the number of housing units preserved through the program to more than 30,000 nationwide since the RAD program’s inception.”