Greystone, Hallmark Partner on $169M GA Affordable MF Rehab
The rehabilitation plan includes a fast-paced construction phase, estimated to be complete within 24 months, during which no residents are expected to be permanently displaced.
ATLANTA, GA—Greystone Affordable Development has closed a $168.6 million multifamily housing transaction in Georgia, its third collaboration with Atlanta, GA-based The Hallmark Companies, which owns and manages approximately 11,000 affordable housing rental units in the US.
The portfolio of affordable housing properties included 26 aged USDA Rural Development Section 515 properties (which were then consolidated into 23), consisting of 1,310 rental apartments serving low-income households in 17 counties across the state.
In the statewide-pooled transaction, Greystone worked closely with USDA’s Rural Housing Service state and national offices and the Georgia Department of Community Affairs to coordinate and secure the financing needed to recapitalize and rehabilitate this at-risk and much-needed housing.
“With only 38 affordable rental homes available for every 100 extremely low-income households in Georgia, a large percentage of the state’s income-restricted households are severely rent overburdened,” says Tanya Eastwood, president, Greystone Affordable Development. “New affordable housing stock just isn’t being created fast enough to meet the demands, thus preservation of the aging stock is absolutely essential. We are able to not only preserve, but also modernize this vital housing stock. It is important to note that this unique and complex process would simply not be possible without housing credits and private activity bonds.”
“The rural areas of the US are often overlooked for real estate investment, so we appreciate how valuable the portfolio preservation strategy is for owners committed to serving rural residents,” says Joyce White, state director of Georgia, USDA Rural Development.
The financing plan combined both public and private funding, and included:
- Tax-Exempt Bonds– Single issuance of $54.3 million in publicly offered multifamily private activity tax-exempt bonds from the Housing Authority of Macon-Bibb County.
- Low-Income Housing Tax Credit Equity– Purchase of four-percent federal and state LIHTCs by Boston Financial Investment Management, generating $54 million in capital contributions.
- RHS 515 Debt- Assumption and subordination of $27.6 million of original USDA Section 515 debt, as well as $368,000 in new USDA Section 515 debt awarded to two of the properties through Rural Development’s Multifamily Preservation and Revitalization Program. The Section 515 program is a direct loan program designed to provide subsidized loans to developers of affordable housing in rural markets.
- Senior Debtof $27.3 million in USDA Section 538 loans provided by Greystone Servicing Corporation.
- Excess Reserves, Project Operations, Investment Income, and Deferred Developer Fees totaling $5 million.
The rehabilitation plan includes a fast-paced construction phase, estimated to be complete within 24 months, during which no residents are expected to be permanently displaced. Substantial renovations, averaging $37,000 per unit, will include both interior and exterior improvements. Greystone will emphasize bringing the properties—built between the late 1970s and the mid-1990s—up to modern standards, addressing accessibility, functional obsolescence and deterioration. This transaction includes the goal to achieve an overall energy savings of at least 20 percent at each property via installation of energy efficient measures such as Energy Star-certified windows, doors, and appliances, high efficiency water heaters, and insulation upgrades.
“With the critical need for affordable housing in Georgia, we are inspired by Hallmark’s proactive efforts in preserving this critical housing stock,” says Laurel Hart, director, Housing Finance & Development Division, Georgia Department of Community Affairs. “We would love to see other owners in Georgia embrace this process, which is clearly something of a ‘secret sauce’ that Greystone has developed for the benefit of thousands of affordable housing residents.”
“Greystone has been an incredibly valuable partner in our role as stewards of affordable housing in the southeast,” says Pete Petersen, president, The Hallmark Companies. “Their sincere commitment to our residents is what drives such a complex transaction to the finish line, and we look forward to working on future transactions together.”
“We strive to create a blueprint for preservation that can be replicated across the country as we continue to seek opportunities to recapitalize and rehabilitate multiple properties in a single transaction,” says Will Eckstein, Senior Vice President, Greystone Affordable Development. “These public/private partnerships not only preserve and improve much-needed affordable housing in rural communities, it drives economic investment and is a win-win for all. We especially thank Hallmark for their continued confidence in Greystone to guide them through this process for the third time and their commitment to affordable housing across the state of Georgia and the Southeast.”