Dealmaker: Walker & Dunlop Secures $35M for Multifamily, Office Assets

June 7, 2019

Walker & Dunlop, Bethesda, Md., arranged $35.3 million in construction and acquisition financing for assets in Tennessee and North Carolina.

The firm arranged a $21 million construction loan for Kodak Crossing in Kodak, Tenn., a new multifamily property being developed by VITA Development Group in a designated Opportunity Zone in Sevier County.

Established by the Tax Cuts and Jobs Act of 2017, Opportunity Zones are a nationwide community investment tool that encourages long-term investments in designated low-income areas. Under the OZ program, developers that place unrealized capital gains into dedicated Opportunity Funds can receive lower or deferred capital gains taxes. The program requires the developer holds the asset for a minimum of 10 years. HUD has begun creating incentives for Opportunity Zone projects.

Walker & Dunlop Managing Directors Keith Melton and David Strange arranged the loan through HUD’s 221(d)(4) new construction program, which includes both construction and permanent financing in a single loan, mitigating the developer’s interest rate risk.

Located 15 miles east of Knoxville, Tenn., Kodak recently experienced forest fires that caused significant damage to local infrastructure and a housing shortage. When complete, Kodak Crossing will offer 192 affordable rental units ranging from one to three bedrooms, alleviating some of the current housing supply strain.

VITA Development received a two-year construction loan followed by a 40-year fully amortizing fixed-rate loan to develop the property.

Walker & Dunlop also structured $14.3 million in acquisition financing for 4100 South Stream, a Class A office building in Charlotte, N.C. AT&T has used the four-story, 125,000-square-foot property as its regional headquarters since 1988.

Led by Managing Director Mark Strauss and Vice President Rob Quarton, the Walker & Dunlop team structured a two-year interest-only loan for joint venture property owners Shopoff Realty Investments L.P. and Praelium Commercial Real Estate.

“The loan provided us the ability to underwrite a two-prong business that which works whether the existing tenant elects to stay in the asset or leave upon lease expiration,” said Shopoff Realty Investments CEO William Shopoff.