Kansas City, MO
The management company for Opportunities Pavilion, an 81-unit affordable, Section 8 elderly community, brought Sims Mortgage Funding into the deal to evaluate refinancing options. Sims had worked closely with the manager, Community Realty Management, on four prior refinancings of affordable housing properties.
Sims originated a new HUD-insured loan via an expedited protocol that did not require an appraisal or a Phase I environmental site assessment. The loan, insured under the Section 223(a)(7) program, extended the loan maturity 12 years past the current loan maturity date, enhancing the annual debt service savings.
The interest rate on the new loan was lower than our underwriting projections, increasing annual debt service savings to approximately $61,000. Moreover, we used the refinancing loan to increase the reserve fund for replacements.
The new loan packed a powerful punch, as it gave the not-for-profit owner and its management company a unique opportunity to recover from a local government decision, albeit temporary, to impose real estate taxes on the property, and to
fund needed repairs and reserves to alleviate critical life-safety issues for which there was not adequate funding