Greystone Affordable Development Closes Financing of $38.5 Million Preservation Transaction in Oklahoma
March 14, 2018
Category: Affordable Housing
Greystone Affordable Development announces the closing of a $38.5 million multifamily housing transaction in Oklahoma.
The portfolio of affordable housing properties includes 13 aged USDA Rural Development Section 515 properties (which were then consolidated into 11) and comprises 294 apartment homes serving low-income households in 8 counties across the state, and are owned and operated by Inola, OK-based Green Companies Development Group, Inc. In the statewide pooled transaction, Greystone’s affordable housing development group worked closely with USDA’s Rural Housing Service (RHS) State and National Offices and the Oklahoma Housing Finance Agency to coordinate and secure the financing needed to acquire and rehabilitate this at-risk and much-needed housing.
“This transaction is a wonderful model for other affordable housing owners to follow when considering the inevitable aging of precious income- and age-restricted housing stock,” said Deborah Jenkins, Executive Director, Oklahoma Housing Finance Agency. “We are thrilled to participate in this process and to support the preservation of Oklahoma’s affordable housing.”
“As we embark on new recapitalization projects such as this in more and more states around the country, we see a similar pattern of rural affordable housing owners going from being overwhelmed and in disbelief to being amazed and filled with jubilation once they see the possibilities become a reality for their assets and residents,” said Tanya Eastwood, President, Greystone Affordable Development. “With the valuable tax-exempt bond structure, it is possible to preserve critical affordable housing, and we are glad to be able to continue the important work that we do.”
The financing plan combined both public and private funding, and included:
- Tax-Exempt Bonds – Single issuance of $11.87 million in multifamily private activity tax-exempt bonds from the Oklahoma Housing Finance Agency.
- Low-Income Housing Tax Credit Equity – Purchase of 4% Federal LIHTCs by Boston Capital, generating $5.97 million in capital contributions.
- RHS 515 Debt – Assumption and subordination of $7.86 million of original USDA 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, $3.59 million in new USDA Section 515 debt was awarded to 3 of the properties through Rural Development’s Multifamily Preservation and Revitalization (MPR) Program.
- Senior Debt of $6.26 million in USDA Section 538 loans provided by Greystone Servicing Corporation, Inc.
- Seller Notes of $1.78 million provided by the sellers of the 13 original properties.
- Excess Reserves, Project Operations, Investment Income, and Deferred Developer Fees – totaling $1.16 million.
The rehabilitation plan includes a fast-paced construction process, estimated to be complete within 10 months, during which no residents are expected to be permanently displaced. Substantial renovations, averaging $33,800 per unit, will include both interior and exterior improvements. Particular emphasis will be placed on bringing the properties, built between 1978 and 1986, up to modern standards, addressing accessibility, functional obsolescence and deterioration.
“We are excited that the financing portion of the preservation is complete, and we can now embark on the ‘rapid rehab’ process to bring the nearly 300 units to modern standards with minimal displacement for our residents,” said Brian Green, President, Green Companies Development Group. “This innovative structure, and the way Greystone has ushered through the complex recapitalization process so far, has given us confidence to take a similar approach with other holdings. It’s a win-win for everyone, especially the hundreds of residents who will soon benefit from beautiful, newly refurbished communities.”