Walker & Dunlop Inc. (W&D), a provider of commercial real estate financing solutions, recently closed the first loan through Freddie Mac's new Direct Purchase of Tax-Exempt Loans initiative, which helps to keep rental housing affordable for lower-income families through cost-effective financing for tax-exempt multifamily properties.
Specifically, W&D originated a $14.3 million loan for The Lakewoods, a 417-unit, senior-restricted apartment building located in Dayton, Ohio, for Millennia Housing Development, Ltd. (Millennia).
About 95% of the units will receive subsidies under a U.S. Housing and Urban Development Senior Preservation Rental Assistance Contract (SPRAC), Freddie Mac officials say in a press release. The property is Low-Income Housing Tax Credits restricted.
Kimball Griffith, vice president of affordable sales and investment for Freddie Mac Multifamily, explains that the ‘Direct Purchase of Tax-Exempt Loans offering is more cost efficient for the borrower than publicly offered credit-enhanced bonds and is the first step toward securitization.’
The acquisition rehab loan features a 16-year fixed-rate and 35-year amortization structure.
Frank Baldasare, senior vice president for W&D, says the new program ‘eliminates many of the costs that would normally be associated with bond issuance, making it ideal for projects like The Lakewoods, developed with 4 percent Low-Income Housing Tax Credits.’
It can also speed up the closing process: Christine Robertson, vice president of Millennia Housing Development Ltd., points out that the project went ‘from award to closing in under nine months.’
‘With only 12 SPRAC awards in the country and Freddie Mac's new Direct Purchase of Tax-Exempt Loans offering involved, all of our financing partners had to sustain faith in Millennia and The Lakewoods,’ Robertson says. ‘We also had to work quickly to ensure that the closing occurred before The Lakewoods' mortgage matured. Only through commitment to this timeline and the end goal from all of our partners could we achieve this closing.’