Sims Mortgage Funding (SMF) recently closed an FHA-insured loan for the Shalom House, a 151-unit elderly project located in Ventnor, NJ.
The Situation
Shalom House was constructed in the early 1980s and financed with a HUD Section 202 Direct Loan. Its primary source of income is a Section 8 Housing Assistance Payment (HAP) Contract that had a remaining term of approximately 17 years. The Section 8 subsidy is sufficient to fund operations and debt service, but the Project has growing capital needs that could not be financed from operations and current reserves.
Financing Details
- Sims underwrote a new $8,672,800 loan insured under the Section 223(f) program that was approved by HUD under the Multifamily Accelerated Processing (MAP) program in approximately 100 days. Closing occurred 78 days later.
- Approximately $2,270,000 in loan proceeds were escrowed for capital repairs; $900,000 funded an initial deposit to a reserve fund for replacements; and, $1,300,000 in a Developer Fee will be distributed to the Sponsor.
- The new loan reduced the Project’s interest rate by approximately 50% and will amortize over a 35 year period. Concurrent with the closing of the loan, HUD awarded the Project a 20 year renewal of its Section 8 HAP Contract; when the remaining term of the prior contract is added, the Project will have Section 8 funding in place for approximately 37 years.
The Outcome
As a result of the SMF loan, the Project has a significant source of new capital for repairs and reserves, and a long-term Section 8 funding platform. As a result, the Sponsor will continue to provide affordable housing to low and moderate income elderly in the greater Atlantic City area for years to come.
Related Posts
- SMF Completes Complex, Challenging, Construction Financing ( April 22, 2022 )
- HUD Multifamily Mortgage Insurance Expands Beyond Its Historical Role ( March 29, 2022 )
- When Perfect is the Enemy of the Good ( February 24, 2022 )
- 2021 In Our Rear View Mirror ( January 25, 2022 )
- SMF Uses Note Modification to Reduce California Hospital’s Interest Rate by 60% ( October 26, 2021 )
- Ten Years Later, SMF Tallies A Transactional Triple-Play for Affordable Elderly Housing Communities in Pennsylvania ( September 21, 2021 )
- Dog Days of Summer = Positive HUD Program Developments ( August 17, 2021 )
- SMF Uses Note Modification to Refinance Again an Affordable Elderly Housing Community in Brooklyn ( July 21, 2021 )
- From the Jersey Meadowlands to the Bayou – Sims Mortgage Funding Has It Covered! ( June 23, 2021 )
- HUD’s Three-Year Waiver – One Year Later ( April 29, 2021 )