NEW YORK, NY - Greystone, a leading provider of affordable housing recapitalization and rehabilitation services, today announced the closing of a $43.7 million multifamily housing transaction in Alabama. The 13 aged USDA Rural Development Section 515 properties, consisting of 398 apartment units serving low-income households in 10 counties across the state, are owned and operated by ARD, Inc. The construction phase of the rehabilitation is expected to be completed within seven months with residents in place.
Greystone’s Affordable Housing Initiatives Group worked closely with the Federal and State USDA Rural Housing Service and the Alabama Housing Finance Authority to coordinate and secure the financing needed to acquire and rehabilitate the portfolio.
“Affordable housing communities across the U.S. are showing significant age and many are in need of extensive rehabilitation and modernization. Combining this fact with increased state and federal budget constraints has made preservation of existing affordable housing stock even more of a challenge,” said Tanya Eastwood, Managing Director and head of Greystone’s Affordable Housing Initiatives Group. “With little investments being made in construction of new multifamily affordable housing properties across rural America, renovating the already shrinking housing supply is more critical than ever.”
The financing plan combined both public and private funding and included:
• Tax Exempt Bonds - Issuance of $13.8 million in multifamily private activity tax exempt bonds by the Alabama Housing Finance Authority. The short-term bonds were issued as a public offering facilitated by Merchant Capital and credit enhanced by Ginnie Mae.
• LIHTC - Purchase of 4% Federal LIHTCs by Boston Financial Investment Management, generating over $7 million in capital contributions.
• RHS 515 Debt - Assumption and subordination of $10.1 million of original USDA RD Section 515 debt. The Section 515 program is a direct loan program designed to provide subsidized loans to developers of affordable housing in rural markets. In addition, of the 398 apartment units, 82% continued to receive Section 521 Rental Assistance provided by the USDA Rural Housing Service.
• Senior Debt of $11 million - Long term debt comprised of a combination of USDA guaranteed 538 loans and new USDA 515 loans were issued.
• Other - Other funding sources included additional financial support of $1.45 million.
“Our company needed an innovative approach and a unique financing structure that would allow us to reposition our affordable housing properties in one transaction,” said Willard Corley, President of ARD, Inc. “Greystone stepped up to the plate and provided exactly what we needed.”
The rehabilitation plan consists of substantial improvements for all 398 units. Sample planned interior improvements include new flooring, energy efficient appliances, hot water heaters, upgraded HVAC, kitchen cabinets and countertops, as well as fixture upgrades. Electrical improvements include the replacement of all interior and exterior light fixtures, new GFI outlets and new smoke detectors. Exterior improvements include new insulated double-pane windows, doors, gutters, siding, a new roof system and landscape enhancements.
“Affordable housing preservation at this level requires extensive collaboration and commitment from everyone involved,” added Ms. Eastwood. “At the end of the day, our motivation comes from knowing that providing decent, safe affordable housing will have a positive impact on the lives of the residents in these properties across Alabama.”
The renovation project will have positive short- and long-term economic impacts at both the local and state levels. Much of the $9.8 million in construction costs will go toward Alabama contractors for physical goods and improvements. Furthermore, the contractors and subcontractors stay in local hotels, eat at local restaurants and purchase hardware and personal items at local stores. The General Contractor estimates that the rehab for each of the properties involves an average of 40 workers on site, 70 motel nights, 516 meals and several locally hired employees.
About Greystone: Greystone is a financial services and private investment group whose original core business is multifamily real estate lending. Over the years, Greystone has added business lines that are related to, and natural extensions of, its core business. Headquartered in New York with a presence in 35 states, Greystone is active in three major business segments: Mortgage Finance, Healthcare and Real Estate. Greystone’s mission is to apply unparalleled creativity while modeling corporate compassion. Loans are offered through Greystone Servicing Corporation, Inc., Greystone Funding Corporation and/or other Greystone affiliates.
About Greystone Affordable Housing Initiatives LLC: Greystone Affordable Housing Initiatives LLC, an affiliate of Greystone, is a finance and transaction management company that is focused on meeting the challenges associated with the recapitalization, rehabilitation and preservation of affordable housing throughout the U.S. To date, Greystone has rehabilitated and preserved over 5,000 apartment units with another 5,600 in various stages of completion. The company’s mission is to create meaningful and significant impacts on communities by helping to provide low-income households with decent, safe affordable housing. For more information, please visit www.greyco.com