Walker & Dunlop, Inc. (NYSE: WD) announced today it closed a $7,669,000 loan for Glen Oak Towers, a federally subsidized high rise, catering to senior citizens, in Peoria, Illinois.
This transaction was unique in that it enabled the borrower, Scott Canel & Associates, to acquire and rehabilitate an older Section 8 property using the United States Housing and Urban Development (HUD) 223(f) program under tax credit pilot, thus avoiding the higher costs and rates of 221(d)(4).
In addition, the borrower was able to use the Government National Mortgage Association (GNMA) tax exempt taxable swap structure to reduce transaction costs and obtain a lower interest rate.
Glen Oak Towers was the first transaction to convert a Moderate Rehabilitation Section 8 contract to a Project Based Rental Assistance (PBRA) contract under the Rental Assistance Demonstration (RAD) program.
Carolyn McMullen, senior vice president, commented, “Scott Canel & Associates focuses on acquiring and developing affordable housing properties and our relationship with them enabled us to provide creative financing solutions for Glen Oak Towers. We worked with HUD to convert the Section 8 mod rehab contract to a PBRA contract under RAD, the first transaction in the country to achieve that.”
Scott Canel, principal at Scot Canel & Associates, stated, “Glen Oaks was one of the most complicated transactions of my almost 28 year career in LIHTC transactions. It involved RAD-2, the creation of a new 20 year HAP contract, tax exempt bonds, tax credits, a complex rehab and underpinning all of this, a HUD 223(f) loan.
“The Walker & Dunlop team did an amazing job through it all. Not only did they deliver the 223(f) loan, they also worked seamlessly with all of the many legal and development professionals and our team to bring Glen Oaks to a successful and timely closing.”
Glen Oaks Tower was built in 1954 and rehabbed in 1984-85 with the goal of preserving low-income housing to seniors and people with disabilities. The borrower intends to provide renovations to the 168-unit property and convert the four ground floor commercial spaces into residential units, increasing the total unit count from 168 to 171 units.
Glen Oak Towers is surrounded by an abundance of medical care and hospitals, including Saint Francis Medical Center, Methodist Medical Center and Illinois Medical Center, which makes the property appealing for prospective senior residents.
