Hunt Real Estate Capital has provided $64.1 million in Fannie Mae-backed debt to a joint venture between SDG Housing Partners and nonprofit Affordable Housing Access to finance its $63 million purchase and subsequent renovation of an affordable multifamily property south of Los Angeles, Commercial Observer has learned.
The 17-year, Fannie Mae M.TEB loan is on a 40-year amortization schedule, according to Hunt. It will cover the purchase and renovation of Park Western Estates Apartments, a 216-unit affordable multifamily community in San Pedro, Calif.
The deal marked the second largest M.TEB (MBS Tax-Exempt Bond Collateral) loan insured by the agency through this program, according to information from financial services firm RBC Capital Markets, compiled by Hunt.
Fannie’s MBS Tax-Exempt Bond Collateral program combines the agency’s mortgage-backed securities (MBS) execution with tax-exempt bonds. Fannie issues MBS that’s used as collateral for either existing bond refinancing or new issuance, with 4 percent Low-Income Housing Tax Credits (LIHTC), according to Fannie’s website. Options are available for taxable or tax-exempt, fixed- and variable-rate bonds.
The program is primarily used to finance the rehabilitation of affordable housing properties.
Hunt Real Estate Capital’s Aaron Wooler and John McAlister originated the debt out of the firm’s Arcadia, California office.
SDG and Affordable Housing Access paid just under $63 million for the complex in March, buying it from Newport Beach resident William Pavone, according to the deed and reported by The Real Deal in April.
“The borrower originally acquired Park Western Estates in March of this year through Hunt and Century bridge loans that were closed within three weeks to meet the seller’s closing deadline,” Wooler said in a prepared statement. “With this new permanent financing and tax credit equity, SDG Housing Partners will be able to preserve an at-risk affordable multifamily development that the residents of Los Angeles cannot afford to lose.”
The renovation of the 14-building complex will include upgrades to the exteriors of the buildings as well as to mechanical, electrical and plumbing systems. Other renovations will be done to improve the site’s landscaping and driveway entries. A dog run will be installed, and the site will also feature new lighting, a rebuild of the “tot lot” and playground, a new sitting area and a pergola at the barbecue area.
The work is expected to wrap within 14 months, as per Hunt.
“With schools, health care, public uses, retail and transit access all within 1.6 miles of the community, Park Western Estates is located in a neighborhood that is well suited for affordable multifamily development,” Wooler said in a statement.