ST. PAUL—Oak Grove Capital, a provider of real estate financial services, recently originated an $11.1 million FHA 223(f) loan for Lyndale Plaza Apartments, a 94-unit affordable housing community in suburban Richfield. The 35-year, fully amortizing loan was used to repay existing debt and obtain a fixed interest rate.
Lyndale Plaza Apartments is a class A property with 20% of its units set aside for low income tenants. Completed in November 2012, the original financing package included 4% tax credits, tax increment financing through the city of Richfield and a floating-rate tax exempt bond issuance from the state of Minnesota, company officials say.
Furthermore, Oak Grove was able to obtain a waiver to HUD's “3-year rule” and structure a long-term, fixed-rate FHA loan that not only locked in financing costs over the entire life of the property, but allowed the borrower to pay for cost overruns that occurred during construction.
“Oak Grove guided us through the FHA loan process and, in the end, locked us into a great long-term interest rate,” said Mike Swenson and Terry and Mary McNellis, the co-owners of the property.
Ken Dayton, managing director of Oak Grove's St. Paul office, added that “our extensive knowledge of what can be accomplished through HUD, and not just what's outlined in the HUD Guide, allowed our client to obtain long-term, fixed-rate financing three full years ahead of schedule.”
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