ST. PAUL, MN—Many lenders have begun to say the market looks more favorable for affordable housing and that federal agencies have started to put more emphasis on the sector. Oak Grove Capital, a St. Paul, MN-based lender, for example, has just originated $17.9 million in FHA financing for the National Foundation for Affordable Housing Solutions. The group will use the funds for the acquisition and rehabilitation of three affordable housing complexes in Minnesota. All three are project-based Section 8 developments originally constructed in the late 1970s.
The firm recently reported a record-breaking year with $1.7 billion of affordable, market rate and seniors housing financing in 2013, a 16% increase over its 2012 production. The firm also reported $798 million of affordable housing loans in 2013, a 44% increase over the previous year. And its Freddie Mac and FHA financing increased by more than 150%.
Seward Square Apartments, an 81-unit development in Minneapolis, received $6.5 million of the latest financing. Lewis Park Apartments, a 103-unit development in St. Paul, received $7.8 million. The remaining $3.6 million went to the 78-unit Eastport Apartments in Mankato. All three fixed-rate HUD 221(d)(4) loans carry a 12-month construction period, plus a 40-year term.
As lead lender, Oak Grove worked with the borrower, HUD and other capital sources to simultaneously close all three loans, each of which included tax exempt bonds, MHFA soft financing, and the use of Low Income Housing Tax Credits.
“We worked hard to lock in the low interest rate at a very aggressive level during a period of consistently rising rates,” says Ken Dayton, managing director of Oak Grove's St. Paul office. “Despite a tight timeframe, our deep relationships with HUD and MHFA helped us to facilitate the timely closing of these three very complicated loans, allowing the borrower to preserve the project-based Section 8 housing.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
