PMCC Finances $22M Affordable Housing Rehab in Neptune, NJ

Sebastian Villa Apartments, Neptune, NJ

NEPTUNE, NJ—Prudential Mortgage Capital Co. provided a $22.2-million loan to Silver Street Development Corporation to acquire and rehabilitate Sebastian Villa Apartments , a 171-unit age-restricted affordable housing property in Neptune, NJ. The Freddie Mac loan originated by PMCC consisted of two tranches of debt: a $15.3M 18-year loan amortized over 35 years and supported by property operations and a $6.9M fully amortizing 14-year loan supported by HUD Interest Reduction Payments.  The transaction also included short term tax-exempt bonds issued by the New Jersey Housing Mortgage Finance Agency and $8.4M in low income housing tax credits. The borrower was able to steer the transaction through the HUD Rental Assistance Demonstration (RAD) program as well as cooperate with the New Jersey Department of Community Affairs to ultimately receive project-based rental subsidies on 165 apartment units. The rents on these subsidized units were marked up to post-rehab levels at closing, enabling the property to immediately take on additional debt, debt which was increased still further by the presence of HUD IRP payments. The total financing has allowed for the most comprehensive vision for the renovation of the property, including includes new kitchens, baths, roofing, elevators, and windows, along with ADA compliance work and other upgrades. Alex Viorst , a principal with Prudential Mortgage Capital Company’s affordable originations team, led the transaction. “This transaction involved multiple sources of public and private sector capital, and the sponsor did a great job of putting this financing puzzle together,” says Vorst .  “When the rehab is complete, Sebastian Villas will serve as a beautiful and vital source of affordable housing in this community.” “We are very pleased Prudential was part of the team assisting Silver Street with the acquisition of Sebastian Villa ,” says Chris Poulin , a principal and COO of Silver Street Development , the sponsor of the transaction. “Our organizations have enjoyed a long and fruitful partnership, working together to preserve and transform a number of high-qualify affordable housing communities.”