250-Unit Affordable Project Under Way

Southwest Housing's biggest hurdle was getting the lenders to embrace a ground lease for 25 acres with the City of Dallas Housing Authority, which is the 100% general partner of the Rosemont at Laureland Apartments at 330 E. Camp Wisdom Rd., Paul Weissman, vice president in Denver for the Horsham, PA-based GMAC Commercial Holding Capital Corp., tells GlobeSt.com. A Southwest Housing subsidiary is the special limited partner, developer, manager and guarantor for a project being positioned in a 46.5-acre tract that its parent bought in October 2003.

"It was a little bit of a challenge although we've done this before," Weissman says. GMAC financed a "mirror image" project, the 250-unit Rosemont at Scyene, for Southwest Housing in a separate $17.7-million package at the year's start, he says.

Weissman explains the bifurcated loan has a 24-month construction period and interest set at 2% higher than the BMA Index for the tax-exempt bonds and an 8% fixed rate on the taxable component of the $17.7 million in financing. The Rosemont at Laureland construction, which recently began, will wrap up in September 2006.

Weissman says the Laureland project is a mix of 52 one-, 112 two- and 86 three-bedroom units. The average apartment is 1,065 sf and the average projected rent is $764 per month. "We estimate that to be 20% lower than market rents," he says. The package calls for 20% of the units to be earmarked for residents earning 30% of Dallas' annual median income of $65,100; 48% for residents in the 50% category; and 50% for residents making 60% of the area's annual average.

GMAC Commercial Holding subsidiaries involved in the transaction included Newman Capital, Newman & Associates and the GMAC Commercial Mortgage Construction Lending Division. The Denver-based Newman Capital is the permanent lender and bond purchaser. Newman & Associates was the placement agent and MMA Financial, a subsidiary of the Baltimore-based MuniMae provided the tax credits for Rosemont at Laureland.

According to Weissman, Southwest Housing opted for a private placement because the cost at the end of the day was comparable to a credit-enhanced transaction with Fannie Mae or Freddie Mac. The initial cost, he says, starts out slightly higher than the federal lending groups, but doesn't end up that way. The deal effectively gives GMAC all the credit exposure on the transaction, he says, adding the borrower's track record with GMAC alleviated any risk concern.