Sims Mortgage Funding Closes $20,677,900 for Multifamily Rental Housing
Vintage Realty Company, a major regional developer and property manager headquartered in Shreveport, LA, formed a joint venture with Southern Lifestyle Development, a Lafayette-based developer with experience in Traditional Neighborhood Development (TND) projects. The development team, passing on conventional financing options, turned to Sims Mortgage Funding to obtain HUD-insured construction and permanent financing for the Reserve at Couret Farms.
SMF obtained waivers from HUD that permitted Vintage to bypass the preliminary application stage and allowed SMF to underwrite the loan at the higher loan-to-cost and lower debt service coverage ratios that would be going into effect well after the application was filed. These waivers shortened the financing schedule, helped to avoid an escalation of construction costs and enabled Vintage to maximize loan proceeds.
The $20,677,900 loan was insured under the Section 221(d)(4) program and was underwritten at 85% of replacement cost. The loan features a 40-year amortization commencing 4 months after construction and a fixed interest rate that was considerably below projections. The debt service coverage ratio is 1.31. Closing escrows were approximately $1.76 million.
SMF successfully obtained construction and permanent financing for a start-up project at a competitive, fixed, long-term interest rate and on better terms than were available through commercial financing options. HUD mortgage insurance is an excellent source of capital for the development of market-rate rental housing and, under certain conditions, age-restricted senior housing. It is also a competitive source of capital to refinance or acquire existing projects and to expand or renovate existing, HUD-insured properties with supplemental financing.
For more information, please contact: