Banning Villa Apartments
Lending - FHA - $11.9M
Greystone closed a $11,900,000 FHA 221(d)4 loan for acquisition and substantial rehabilitation of Banning Villa Apartments, a 90-unit age restricted (62 ) 100% Section 8 multifamily property in Wilmington, CA.In addition to the 221(d)4 mortgage proceeds, additional equity was raised by the sale of tax credits. The capital raised provided an estimated $77,815 per unit for renovations. The project, which was built in 1976, will now be completely re-positioned in the market.
The FHA 2211(d)4 firm application was submitted with a waiver request for property tax abatement due to the sponsor’s non-profit status, which was subsequently granted.
A unique feature of this transaction was that HUD allowed the majority of the mortgage proceeds to be funded ahead of the tax creditequity, which is more typical. Moreover, Greystone employed a unique capital markets approach that allowed for a conversion of the tax-exempt bonds into a taxable Ginnie Mae security. This lowered the overall interest rate of the transaction and reduced the negative arbitrage during the 9-month construction period.
“We were thrilled with the ingenuity of Greystone for being able to seamlessly convert to a taxable Ginnie Mae with no rate adjustment. This will be tremendously advantageous in offsetting interest expense during the construction period,” said William Szymczak of Preservation Partners. “We appreciate the coordination between the bond issuer and our advisors, counsel and financial partners for navigating us through this deal, which had a fantastic outcome for our residents as well,” he added.