Sims Mortgage Funding recently closed a $6,754,800 loan for the Lutherwood Apartments, a 125-unit, Section 8-subsidized senior housing project in Scranton, PA. The loan was insured under FHA’s program and features a 35-year amortization. The Sponsor was Diakon Lutheran Social Ministries, a Pennsylvania-based provider of healthcare, retirement housing, and social services to a wide array of communities.

Diakon used the loan to prepay its existing high interest rate debt, reimburse itself for prior advances it made to the project to cover operating costs, fund $1,475,000 in renovations and repairs, and pay FHA fees and financing costs. The loan contained a development fee to Diakon equal to 15% of the repair amount. We were able to maximize the insured loan by obtaining a waiver from FHA to underwrite at 95% occupancy, which was well below the project’s three-year historical performance; they allowed us to use a 97% level, which was closer – but still below – the three year average.

Sims processed the loan under FHA’s Multifamily Accelerated Processing program and arranged funding with taxable GNMA mortgage backed securities. The refinancing will produce $157,000 in annual debt service savings that will be partially used to finance programs and services to benefit the residents.

Lutherwood is the first of three refinancing transactions sponsored by Diakon scheduled to close this year. Sims has obtained FHA approval of the second deal with approval of the third imminent.