Lument recently announced the closing of a $28.8 million Freddie Mac Unfunded Forward loan to finance the construction of Mesquite Terrace Apartments, a 297-unit affordable housing community in Phoenix, Arizona. Tim Hoppin, director in Lument’s Denver, Colorado office, was the lead on the transaction.
The sponsor is first-time Lument client, Trinity Housing Development, which has extensive low-income housing tax credit (LIHTC) transaction experience and a portfolio of approximately 2,637 units in 35 multifamily communities, mostly in the Midwest. The community will be co-developed by Housing for Hope Arizona, Inc. (H4H), a nonprofit affiliate of Catholic Charities Community Services (CCCS) that has been involved in the development of several other LIHTC projects.
“We are excited to collaborate with Trinity Housing Development and Housing for Hope to provide this much-needed affordable housing community,” said Lument’s Hoppin. “We share Trinity’s philosophy that building efficient and sustainable quality housing provides a foundation for strong communities, so anytime we can help a developer do just that we are all in.”
Mesquite Terrace Apartments consists of three mid-rise residential buildings that are rent restricted under the low-income housing tax credit (LIHTC) program. Eleven units are reserved for renters at 50% area median income (AMI) or below and 285 units are set aside for renters earning 60% AMI or below. The unit mix consists of 129 one-bedroom/one-bathroom units, 78 two-bedroom/one-bathroom units, and 90 three-bedroom/two-bathroom units.
Construction on Mesquite Terrace Apartments is expected to be completed in March 2023. Upon stabilization, the $28.8 million Freddie Mac loan and tax credit equity will be used to pay off construction period bonds from a national bank. The capital structure also includes subordinate soft funding from government sources, including a $1 million City of Phoenix Housing Department HOME Loan and a $1 million Phoenix Community Development and Investment Corporation (PCDIC) loan.
The tax-exempt Freddie Mac loan features a 30-month unfunded forward commitment, 17-year term, 40-year amortization schedule, and a low, fixed interest rate. As a result of the community’s LIHTC affordability restrictions, Mesquite Terrace qualified for a targeted affordable housing (TAH) execution.