NC made a 20-year, permanent loan to new customer Oak Hill CDC for $450,000 to refinance three existing mortgage loans as part of a significant recapitalization and rehabilitation of their 7-building, 24-unit Union Hill Portfolio in Worcester, MA. The loan’s longer maturity was needed to match the duration of the City of Worcester’s subsidy funding and affordability restrictions. Oak Hill brought in Maloney Properties, which has managed the portfolio for several years, as joint owner. Together, they will own and operate the Union Hill portfolio through the term of NC’s loan, with Maloney’s ownership percentage decreasing over time. The major rehabilitation of the buildings will be funded by MassHousing, HOME, and CDBG.
By consolidating existing loans with the proposed NC loan and improving operating costs (by reducing utility expenses and maintenance expenses when major renovations are complete), Oak Hill is increasing property cash flow by 30%. The local housing market is fairly stable, with high demand for three-bedroom apartments in the neighborhood.
In the two years prior to receiving our loan, Oak Hill had improved rent collection and property operations, achieving profitable property operation during 2016 even with rents for non-Section 8 units more than 10% below market rents in the area. NC’s loan will be repaid from the proceeds of a future recapitalization of the portfolio.