Multifamily Affordable Housing Preservation Case Studies

Brookside Terrace Apartments, Southbridge, Massachusetts

The Property, a 166-unit affordable multifamily property built in 1972, was acquired and rehabilitated by the Partnership in 2000 using LIHTC and financing from the Massachusetts Housing Financing Agency (MHFA) and the Department of Housing and Community Development (DHCD). The Property had an Interest Reduction Agreement with MHFA and HUD in accordance with Section 236 of the Housing Act, an un-insured Section 236 mortgage with MHFA, and a Rent Supplement Contract for 45 units that was scheduled to terminate in 2014.

Recap helped the Client: convert the Rent Supplement contract to a Section 8 project-based voucher contract with Boston Housing Authority through HUD’s Rental Assistance Demonstration (RAD) program, Component 2; decouple the IRP from the 236 Mortgage Note; close a Bridge Loan with MH in order to trigger the RAD conversion; underwrite the financial transaction totake out the Bridge Loan; assist with the buy-out of the limited partner; request debt deferral from MH and DHCD; and close on a $7.5M loan.

Starrett City, Brooklyn, New York

When the proposed sale of Starrett City was blocked in mid-2007, Recap was retained to find a solution that would allow the owners to realize their equity while maintaining affordability for the existing residents. In pursuit of these objectives, we first developed a Memorandum of Understanding (MOU) as a framework for a transaction that could be supported by the owner and the four government housing agencies regulating the property. We then represented the owner in designing, negotiating, and completing a successful transaction.

While originally planned as a sale, the property was ultimately refinanced as a result of the dislocation in the financial markets that intensified in late 2008. At $531 million, the Starrett City transaction represents the largest single-property financing ever completed by Freddie Mac. Closing was achieved in December, 2009.

Riverplace Towers, Lowell, MA

On expiration of an LIHTC compliance period, Recap assisted the general partner of this 448-unit complex in buying out the project’s limited partner and carrying out a $30 million recapitalization of the property. Recap developed recapitalization strategies and implemented the selected transaction – refinancing of the existing debt with 4% LIHTCs and tax exempt bonds, issued through the local HFA’s federally insured risk-share loan program with HUD.