West Philadelphia, PA
St. Matthew Manor is sponsored by the St. Matthew African Methodist Episcopal Church, an organization with ties to the community that are over 100 years old. The primary source of income for the Project, which was constructed in the early 1990s, is a Section 8 Contract that had a remaining term of approximately 17 years. The Section 8 subsidy is sufficient to fund operations, but the Project has growing capital needs that could not be financed from operations and current reserves. Moreover, the Sponsor also was looking for sources of funding for its community-based and mission-driven programs.
To meet the Sponsor’s objectives, the new loan had to satisfy three criteria: (1) ensure that affordable housing units would be preserved and funded on a long-term basis; (2) finance improvements to the property that would enhance resident comfort and provide a more energy-efficient operation; and, (3) provide a source of capital that would assist them with their community outreach.
SMF enabled the Sponsor to meet their objectives by underwriting a $5,089,900 loan insured under the Section 223(f) program that was approved by HUD under the Multifamily Accelerated Processing (MAP) program in 51 days. Closing occurred 78 days later.
Approximately $829,000 in proceeds were escrowed for capital repairs; $380,000 funded an initial deposit to a reserve fund; and, $360,000 in a Developer Fee was distributed to the Sponsor at closing. In addition, the
Sponsor may receive an additional $320,000 in Developer Fee if energy-related improvements produce a level of efficiency.
The new loan reduced the Sponsor’s interest rate by 60% 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, the Sponsor will continue to provide affordable housing to low and moderate income elderly for years to come.