Rendering of rehabilitated Garden Spires Apartments, Newark, NJ

NEWARK, NJ—KeyBank Real Estate Capital and KeyBank Community Development Lending & Investment have provided a first-of-its-kind Fannie Mae Healthy Housing Rewards Enhanced Resident Services loan to Omni New York for the acquisition and rehabilitation of two affordable housing properties in Newark, NJ.

The financing totaled $98.4 million, with a $59 million Fannie Mae Reduced Occupancy Affordable Rehab loan and a $23.8 million Economic, Redevelopment and Growth bridge loan secured by Garden Spires Apartments and a $15.6 million Fannie Mae Affordable Mortgage loan secured by Spruce Spires Apartments.

SVN Affordable acted as the exclusive listing broker and was responsible for valuing, marketing and negotiating the transaction on behalf of the seller.

“Through our relationship with Fannie Mae, KeyBank is able to invest in affordable housing that will have a long-lasting impact on communities by improving the quality of life for residents, families and surrounding neighborhoods,” says Rob Likes, national manager of KeyBank's CDLI team. “The rehabilitation of Garden Spires and Spruce Spires Apartments will preserve and improve the quality of 656 affordable housing units in the greater Newark community.”

Built in 1963, Garden Spires Apartments is a 544-unit affordable housing, high-rise apartment complex comprised of two 20-story apartment buildings. The property offers six different floor plans consisting of one-, two- and three-bedroom units. 350 of the units are subsidized by a long-term Project Based HAP Contract.

Built in 1920, Spruce Spires Apartments, spread across four four-story buildings and one five-story building on Spruce Street and Martin Luther King Boulevard, is a 113-unit subsidized housing property with all units included in a project-based Section 8 Housing Assistance Payment (HAP) contract. The property also benefits from New Jersey's PILOT program. The apartment complex is comprised of six five-story buildings.

“At Fannie Mae, we believe that providing resident support services at affordable rental housing properties can improve the health and well-being of the people who call those properties home,” says Bob Simpson, vice president of affordable and green financing at Fannie Mae. “KeyBank has been a great partner for our first Healthy Housing Rewards Enhanced Resident Services loan and we are thrilled to support developers, like Omni New York, who are committed to ensuring that renters and their families have greater access to health, education, and other community services.”

Fannie Mae's Healthy Housing Rewards Enhanced Resident Services program offers incentives to borrowers who provide resident services at their affordable multifamily properties.

“Omni New York is proud to partner with KeyBank on the preservation and rehabilitation of Garden Spires and Spruce Spires Apartments,” says Eugene Schneur, managing director of Omni New York. “Access to affordable housing can have a transformative impact on neighborhoods, and our partnership with KeyBank reflects our commitment to providing quality housing and lifestyle solutions to this community.”

Both properties will undergo extensive rehabilitation, including renovating lobby areas, replacing and upgrading building mechanics, modernizing elevators, installing new roofs and doors, improving common areas, replacing boilers, and overhauling and installing new security cameras. The in-unit capital improvements will include installing new floors and windows and replacing kitchen cabinets, appliances, countertops, light fixtures, bathroom vanities, sinks, faucets, bathtubs and tiles.

“The sale of Garden and Spruce Spires was a complicated process and demanded the skillset of an experienced, sophisticated and nimble buyer,” says Gene Levental, managing director, SVN Affordable. A complex capital stack with a variety of equity sources was needed in order to facilitate the deep renovation and stabilization that the projects required. Given the size, location, and HAP component of the deals, there was a lot of interest from regional and national developers. After a competitive bidding process and much diligence, Omni was selected as the right developer for the opportunity, successfully navigating regulatory hurdles and the changing economic environment.”

In addition, both properties will offer resident services supported in part by Fannie Mae's Healthy Housing Rewards Enhanced Resident Services initiative. At these properties, residents will have access to a variety of services, including programming for health and wellness, nutrition and healthy food access, workforce development, adult and youth education support, and community engagement.

Dirk Falardeau of Key's Commercial Mortgage Group and Kyle Kolesar of Key's CDLI group arranged the financing for both properties.

UPDATE, 10/8/2018, 2:50 p.m.: This story has been updated with additional information on the deal provided by the sale broker, SVN Affordable/Leventhal Realty.

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KeyBank and Fannie Mae Partner on Newark Affordable Housing Rehab Financing

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