Dealmaker: BWE Secures $15M for Affordable, Senior Housing Using RAD for PRAC Program
(La Vista de Lopez illustration courtesy of BWE)
BWE, Cleveland, secured $15.2 million in permanent loans to finance three affordable and senior housing communities in Austin, Texas, Douglasville, Ga. and Mobile, Ala.
Jon Killough, Executive Vice President in BWE’s Montgomery, Ala., office, and Tony Love, Senior Vice President in BWE’s Cleveland office, originated the loans using the Department of Housing and Urban Development’s RAD for PRAC initiative, a new tool designed to preserve existing Section 202 housing as well as create new Section 8 housing across the country.
Traditionally, Section 202 PRAC rental assistance could only be used for operating expenses, not debt servicing. The RAD for PRAC process allows borrowers to convert PRAC subsidies to project-based Section 8 contracts, which boosts the rental subsidy to a level that can pay for both operating costs and debt service, while also bringing more project-based Section 8 homes to the market. These transactions represent some of the first multifamily RAD for PRAC executions in the country.
“For aging portfolios in need of repairs and refinancing, RAD for PRAC is a powerful tool to inject new capital into affordable housing properties,” Killough noted.
The three properties financed through this tool are:
AHEPA 310 (Mobile, Ala.), a $6 million HUD-insured Section 221(d)(4) loan to refinance a 175-unit scattered-site apartment community. The three buildings, AHEPA V, VI, and VII, contain 51, 65, and 59 one-bedroom units, respectively. All units will be affordable to residents earning at or below 50% of the area median income. The loan terms include a 40-year fixed-rate term with interest only payments during the rehabilitation period and a 40-year amortization.
Sweetwater Point (Douglasville, Ga.), a $7.7 million loan to finance the construction of a 96-unit, garden-style, age restricted (62+) community. The three-story multifamily senior affordable housing building will include 55 one-bedroom units and 41 two-bedroom units, and all units will be affordable to residents earning at or below 60% AMI. The loan was originated with Freddie Mac and has a 17-year fixed-rate term with a 40-year amortization.
La Vista de Lopez (Austin, Texas), a $1.5 million HUD-insured Section 221(d)(4) loan to finance the construction of a 27-unit apartment building for lower-income seniors. The apartments at La Vista de Lopez will be affordable to residents earning at or below 50% AMI. The development has also received a HUD Section 202 Capital Advance loan, and it is the first multifamily property in the country to combine an FHA-insured new construction mortgage with a new Section 202 Capital Advance. The Section 221(d)4 loan has a 40-year term with a 40-year amortization period.
