Dealmaker: Walker & Dunlop Closes $155M in HUD Loans

Walker & Dunlop, Bethesda, Md., structured a $93.9 million HUD loan for Polyclinic Apartments, a Section 8 affordable housing property in Hell’s Kitchen on Manhattan’s west side.

Managing Director Chris Rumul led the team that arranged the financing via HUD’s 223(f) program for Standard Communities, Los Angeles. He said the loan provided acquisition financing and will also allow the borrower to make immediate repairs and fund future renovations. In conjunction with the purchase, Standard Communities preserved the existing 151 affordable housing units by renewing the property’s 20-year Section 8 Housing Assistance Payment contract and obtaining a 35-year Article XI tax abatement approval through the New York City Department of Housing Preservation and Development.

“This HUD transaction was unusual because it involved an acquisition, the negotiation of multiple different tax agreements and coordination with several state and local government authorities,” Rumul said. He noted the transaction represented Walker & Dunlop’s first HUD forward rate lock and its largest HUD financing of 2017.

Located on West 50th Street between 8th and 9th Avenues, Polyclinic Apartments is blocks away from Central Park and close to public transit including the 50th Street subway station. The building Polyclinic Apartments occupies dates to 1910 with a large addition in 1930. Formerly a hospital, the building underwent a renovation and conversion to multifamily apartments in 1981. The community has maintained a 99.4 percent average occupancy over the past three years. 

Walker & Dunlop also structured a $61.1 million HUD loan for Monarch at Waugh Chapel in Gambrills, Md. The Class A multifamily project is a joint venture between Bozzuto Development Co., Greenbelt, Md., and Reliable Contracting, Odenton, Md.

Dee McClure, Managing Director at Walker & Dunlop, led the team that arranged the loan via HUD’s 221(d)(4) new construction program, which provides both construction and permanent financing within a single loan structure. She said the 221(d)(4) program minimizes interest rate risk for the developer.

The financing included a two-year construction loan followed by a permanent 40-year loan with a fixed rate, McClure said.

Monarch is part of the Waugh Chapel master-planned community, which will include residential, commercial, office and recreational amenities along the intersection of Crain Highway and Evergreen Road. Two shopping centers within the community, the Waugh Chapel Towne Center and The Village at Waugh Chapel, house more than 120 shopping and dining options. When fully constructed, the Waugh Chapel community will also include a business park, assisted living facility and athletic fields.

Located midway between Baltimore and Washington, D.C., Monarch at Waugh Chapel will occupy 15.7 acres. The community will have two wings connected by a 7,300-square-foot clubhouse containing a leasing office, fitness center and solarium.