Sims Mortgage Funding, Inc. (SMF) closed in September a $1,800,000 HUD-insured Section 223(f) loan for the AuSable Valley Apartments, a Section 202 elderly project located in Fairview, MI. AuSable is owned and managed by Wellspring Lutheran Services, a not-for-profit organization that operates approximately 19 communities in Michigan serving over 2,600 residents. Wellspring provides affordable housing, home care, hospice and grief support, independent and assisted living, memory care, short‐term rehabilitation, and skilled nursing care.
AuSable was constructed in 1981 and consists of 60 one-bedroom apartments in a single-story structure containing approximately 47,500 square feet. It is part of a 90‐acre senior housing campus that includes attached condominiums, independent living residences, and skilled nursing care. AuSable recently suffered from a modest decline in occupancy that was in part attributed to the need for capital improvements to make it more competitive in its rural marketplace.
The sponsor had three basic goals in pursuing the recapitalization: (1) ensuring that affordable housing units would continue to be available on a long-term basis; (2) financing a series of moderate improvements to the property that would improve accessibility, enhance resident comfort and increase occupancy; and, (3) generating a Developer Fee that would provide additional organizational resources that could be applied system-wide.
These goals were met through the Section 223(f) loan, which was underwritten at 90% of the property’s fair market value and features a 35 year, fully amortizing term. As part of HUD’s preservation goals, AuSable received a 20-year Section 8 Housing Assistance Rental Contract and an extension of that Contract for an additional 18 years beyond its September 2034 expiration date.
With funds available for capital repairs and reserves, and a Developer Fee, Wellspring will be able to meet one of their core corporate goals of providing affordable housing to low and moderate income elderly for years to come.
For additional information about AuSable Valley transaction, please contact us.