Creative financing builds attainable apartments in DC area
This spring, long-time customer AHC opened St. James Plaza in Alexandria, VA, which has been losing affordable housing options. The development features 93 new apartment homes at 40-60% AMI ($54,400 - $81,000 for a family of four.) The campus also hosts a daycare and early childhood learning center.
“It was a big win to be able to help build affordable homes,” said David Brotman, AHC Project Manager. “NC really helped this project come to fruition. They offer the creative solutions we need to get our projects to work, and we work well together.”
St. James Plaza is a large development for us to finance, about double the homes we usually finance at once.
“As tax credit developments downsize, it’s good to see a large development in an increased-value market, where it is always a concern that people may get priced out of the area. We want to be sure they will be able to remain in their communities and near where they work,” our Chief Lending Officer Stephen Peelor said.
This unique loan solution started with a $6.5 million acquisition loan to AHC, which split the land into two parcels. The new apartments were built on the first site. The second was sold to a homebuilder who will build 35 market-rate townhomes. Traditional lenders typically shy away from financing a dual-use project like this. The initial LTV was 85%; we let them increase their leverage when they split the property, another unusual feature of this loan, as was the partial guarantee we offered because of the size of the loan and AHC’s strength.
Once the construction loan for the affordable project was closed, we released AHC’s mortgage on the affordable site, and held the lien on the townhome parcel. This allowed AHC to make sure they could acquire, split, and hold the property until they could sell it to a developer, which helped subsidize the affordable side.
AHC is an Arlington, VA-based developer that owns 7,000 affordable and mixed income apartment homes around DC and Baltimore. Their mission is to ensure people who can’t afford market-rate live in safe, good-looking, well-maintained properties. In addition, they property manage most of the apartments they own.