Working with Avenue CDC to Preserve Affordable Homes in Houston
We made a $5.4 million loan to Avenue CDC to preserve affordable apartments in the Northline neighborhood of Houston, TX. NC offered more leverage than a traditional bank, which will allow Avenue to stretch their investment, and pursue new development opportunities.
Avenue CDC requested a 95% LTV loan for $5.4 million to acquire Oak Arbor Townhomes, a 94-unit mixed-income rental development a few miles from downtown. Of its 94 apartments, 70 at Oak Arbor are restricted to low-income households; the 20 market-rate units are also affordable, targeted for individuals and families making around $50,000 (60 -70% AMI). Oak Arbor’s market rents are more than 10% below local rents, excellent conditions for very high occupancy; Oak Arbor has a 98% occupancy rate and a waiting list for potential tenants. Much of Houston has grown rapidly in the past 10 years, due to a strong oil and gas economy. Home costs have grown and along with that, the number of rent-burdened households.
“Avenue's goal is to help long-term residents stay where they are and avoid displacement. This gives them the ability to thrive,” said Robert Fiederlein, Senior Director Real Estate Development at Avenue.
Displacement and having to reestablish themselves can be traumatic to families, especially those with children. It uproots households from their social networks, schools and churches. Avenue’s affordable homes are targeted to working families who provide service jobs in the local economy. It’s crucial to an area’s economy to have those workers. Providing an array of affordable home options ensures they will be there.
Our loan will provide financing to acquire the property and give Avenue CDC time to secure permanent financing, most likely agency financing, within 18 months.
Fiederlein worked directly with our Chief Lending Officer Stephen Peelor. “My very first question to Stephen was, ‘we have a hard deadline, can you meet it?’ He said, ‘Let’s do it.’ We had a commitment letter within a month. NeighborWorks Capital's ability to move quickly, to analyze, understand and turn a project around helped us purchase this property. Without this support and ability to help us meet the tight deadlines, we wouldn’t have been able to do the project,” Fiederlein said.
Fiederlein said the process went very smoothly and without hiccups, even with the size of the loan and the amount of paperwork involved.
“Avenue has a fantastic reputation and are very supportive of a holistic approach to making the community a better place to live, from providing homes to supporting arts organizations. They are a full-service community developer who is very responsive and engaged locally,” said Peelor.
Peelor points to Avenue’s response to Hurricane Harvey as one example. After the hurricane, Avenue turned half their staff into “hurricane recovery specialists,” helping residents with response needs such as how to work with FEMA, or how to communicate effectively with their insurance company.
The Oak Arbor acquisition will increase Avenue CDC’s operating cash flow through rental revenues, and further establish its presence in the Northline community, where they are looking at other development opportunities, to help increase the quality and affordability of homes.
Avenue CDC got its start in northwest Houston helping communities organize themselves around basic initiatives like health, education, and gentrification, and provided leadership training. They provide a variety of programs and services dedicated to improving economic opportunity and community leadership and engagement for residents of the Near North Side and Northline neighborhoods of Houston.
Avenue CDC develops affordable single-family and multifamily projects. Its portfolio includes 651 units in 10 multifamily rental properties and 31 single- family homes rented to low and moderate-income households.