BETHESDA, MD-Walker & Dunlop secured two acquisition loans totaling $19.8 million under Freddie Mac's Capital Markets Execution Program for properties owned by CAPREIT in Newport News, VA. The properties are adjacent multifamily affordable housing communities called Arboretum Place and Silver Hill at the Aboretum.

The transaction is a standard multifamily loan execution with an affordable housing component, Walker & Dunlop vice president Dustin Swartz tells GlobeSt.com. Both properties are affordable, under Section 42 of the Low Income Housing Tax Credit program. Arboretum Place contains 76 LIHTC units, or 41% of the total units, and Silver Hill at the Arboretum contains 123 units, or 80%.

"The initial tax credit expired in 2012 but they operate under an extended affordability agreement for another 15 years," Swartz explains. Both loans were structured with 10-year terms with 3-years interest only, followed by 30-year amortization periods. Financing for Arboretum Place was underwritten to a 79% LTV with a 1.40x debt-service coverage ratio. The financing for Silver Hill at the Arboretum was underwritten to a 77% LTV with a 1.30x debt-service coverage ratio.

Swartz, who came to Walker & Dunlop via the company's acquisition of CWCapital, says Walker & Dunlop is eying the affordable housing finance space with great interest. Year to date the company has placed about $81 million in such loans. "We like this business and we are trying to do more with it."

The business case for affordable housing, from an underwriter's perspective, is a good one, he adds. "The properties tend to stay very full and even have waiting lists," he says.