Greystone Affordable Development closed a $62.6 million transaction that refinances and renovates 384 affordable housing units in Michigan.
Owned by PK Companies LLC, the units are spread across 10 properties in nine different counties. The recapitalization and rehab are made possible by pooling $19.7 million in bonds statewide, refinancing $24 million in USDA-issued debt and additional equity from tax credits, among other sources, to ensure permanent affordability for the residents.
Greystone’s affordable housing preservation group worked closely with USDA’s Rural Housing Service (RHS) Michigan State Offices, as well as the Michigan State Affordable Housing Corporation to coordinate and secure the financing needed to acquire and rehabilitate this at-risk and much-needed housing. The financing sources include:
- Tax-Exempt Bonds – Single issuance of $19,683,000 in multifamily private activity tax-exempt bonds by Michigan State Housing Development Authority.
- Senior Debt – $2,741,000 in long-term debt comprised of USDA 538 Guaranteed Loans, provided by Greystone Servicing Company LLC.
- RHS 515 Debt – Assumption and subordination of $16,625,000 of original USDA Section 515 debt. The Section 515 program is a direct loan program designed to provide subsidized loans to developers of affordable housing in rural markets.
- RD Debt – Assumption of $7,491,938 in USDA RD debt.
- Low Income Housing Tax Credits – Purchase of 4 Percent Housing Credits by National Equity Fund, generating $9,754,727 in capital contributions.
- Other sources including seller’s note, replacement reserves, and insurance proceeds totaling $6,280,536.
With the financing in place, the rehabilitation plan includes a fast-paced construction process, estimated to be complete within 16 months, during which no residents will be permanently displaced. Substantial renovations, averaging $38,599 per unit, will include both interior and exterior improvements.
