Dealmaker: Hunt Real Estate Capital Provides $37M in Fannie Mae, Freddie Mac Funds

Hunt Real Estate Capital, New York, provided $37.2 million in Fannie Mae and Freddie Mac funds for Texas and Minnesota multifamily properties.

The firm provided three Fannie Mae conventional multifamily loans totaling $25.4 million to refinance a portfolio of Dallas-area communities, Spanish Villas, Spanish Rose and Spanish Ridge.

Built in 1959, Spanish Villas is a 148-unit garden-style community in Grand Prairie. Spanish Rose with 76 units and 372-unit Spanish Ridge are both in Dallas. More than 95 percent of the portfolio’s units are mission-driven.

Because Hunt structured the Fannie Mae loans at a low loan-to-value level ratio, the borrower was able to avoid and limit the contribution of additional principal and interest escrows.

Hunt also provided an $11.8 million Freddie Mac Tax-Exempt Loan facilitating the Rental Assistance Demonstration conversion and $25 million renovation of Elliot Twins, two adjacent 12-story buildings in Minneapolis Public Housing Authority’s portfolio.

Elliot Twins illustration courtesy
Minneapolis Public Housing Authority

The renovation of the two towers is the largest rehabilitation transaction MPHA has undergone and the first within MPHA’s portfolio to utilize the RAD program.

Hunt Director Joshua Reiss said the Elliot Twins are two of the oldest high-rise properties in MPHA’s portfolio. “This modernization will help ensure that current and future residents have access to quality, safe and sustainable housing,” he said.

The construction that recently started will preserve 174 units, add 10 disability-accessible units and a new community building and reduce energy usage by up to 35 percent. Residents can remain on-site throughout construction.

The Elliot Twins date to 1961 and nearly 80 percent of residents are seniors or have a disability. Residents’ average annual household income equals $10,200. After the RAD conversion, all residential units will be subsidized under 20-year Section 8 contracts.

Upon stabilization, tax credit equity and the Hunt-arranged Freddie Mac permanent TEL loan will pay off the construction period bonds.

“The Freddie Mac loan is a 24-month unfunded forward commitment with a low fixed interest rate, 18-year term and a 40-year amortization schedule” Reiss said.

In addition to the Freddie Mac loan, funding sources included construction financing by Bremer Bank, St. Paul, Minn. and tax credit equity provided by RBC Capital Markets, Toronto. Other funding sources included an energy-efficiency funds loan from the City of Minneapolis’s Community Development Block Grant program and an MPHA Capital Fund loan.

MPHA said it expects construction to last through late 2021.