Sims Mortgage Funding (SMF) recently closed an FHA-insured loan for the Shalom House, a 151-unit elderly project located in Ventnor, NJ.
Shalom House was constructed in the early 1980s and financed with a HUD Section 202 Direct Loan. Its primary source of income is a Section 8 Contract that had a remaining term of approximately 17 years. The Section 8 subsidy is sufficient to fund operations and debt service, but the Project has growing capital needs that could not be financed from operations and current reserves.
SMF underwrote a new $8,672,800 loan insured under the Section 223(f) program that was approved by HUD in approximately 100 days under the Multifamily Accelerated Processing (MAP) program.
Approximately $2,270,000 in proceeds were escrowed for capital repairs; $900,000 funded an initial deposit to a reserve fund; and, $1,300,000 in a Developer Fee will be distributed to the Sponsor.
The new loan reduced the Project’s interest rate by approximately 50% and will amortize over a 35-year period. HUD also awarded the Project a 20 year renewal of its Section 8 Contract; extending funding for approximately 37 years.
As a result of the SMF loan, the Project has a significant source of new capital for repairs and reserves, and a long-term Section 8 funding platform. The Sponsor will continue to provide affordable housing to low and moderate-income elderly for years to come.
This is the third affordable housing recapitalization that SMF has completed for the Project’s management agent, which operates approximately 7,500 units of rental housing.