Bethany Towers in Hazlet — Courtesy: Walker & Dunlop
By Joshua Burd
A joint venture is acquiring a 1,009-unit affordable housing portfolio, spanning seven towns in New Jersey, with the help of a $144 million Fannie Mae loan arranged by an out-of-state firm.
The financing firm, Bethesda, Maryland-based Walker & Dunlop Inc., said Friday that it brokered the loan on behalf of Hudson Valley Property Group LLC, Red Stone Cos. LLC and Wheelock Street Capital. The firm said the buyers acquired the portfolio with the intention of investing in the properties and upgrading the stock of affordable housing in the region.
The properties are in Paterson, Orange, East Orange, Metuchen, Old Bridge, Hazlet and East Windsor, a Walker & Dunlop executive told The Wall Street Journal. Tenants at all seven properties are predominantly residents receiving Section 8 housing assistance payments from the U.S. Department of Housing and Urban Development.
Walker & Dunlop Managing Director Andrew Gnazzo led the origination team, according to a news release. The seller of the portfolio was Kline Enterprises, according to The Wall Street Journal, in what the newspaper said was a $181 million transaction.
“We were honored to work on this financing with Red Stone, Wheelock, and the HVPG team, which is dedicated to the acquisition and effective management of affordable housing across the country,” Gnazzo said in a prepared statement. “Walker & Dunlop’s scale and deep partnership with Fannie Mae was critical to the success of this transaction.
“Underwriting project-based Section 8 rents in the current environment is not easy, and our team’s extensive knowledge of affordable programs and structuring large pooled transactions allowed us to meet the joint venture’s needs.”
The portfolio consists of six age-restricted properties and one that is not age-restricted, the news release said. Each property has a 20-year housing assistance contract that will outlast the loan term.
“Red Stone Partners has always strived to develop creative solutions for our partners and clients specifically focused on investment in affordable housing communities,” said Brian A. Renzi, managing director for Red Stone. “In this case, we are especially excited to have leveraged our relationship with Walker & Dunlop and Fannie Mae to structure and participate in a flexible multiple-party debt and equity capital structure to maximize the opportunity on this acquisition and preservation of over 1,000 affordable housing units in the State of New Jersey.”
Hilary Provinse, senior vice president for customer engagement at Fannie Mae, said the federally sponsored corporation was “pleased to have partnered with Walker & Dunlop to finance this large affordable portfolio.”
“This transaction underscores our commitment to affordable rental housing and exemplifies our joint ability to creatively structure tailored financing solutions through Fannie Mae’s Credit Facilities,” Provinse said. “It takes a strong partnership and a dedicated team to tackle these types of complex transactions.”
The properties will be managed by Community Realty Management, which has more than 40 years of experience in the local market, including a deep understanding of Section 8 housing.