News - 2007
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2006-055
RED Provides Tax Credit Equity, FHA Bond Enhancement & Bond Underwriting for California Property
Sponsorship Structure enables the Acquisition and Renovation of Section 8-Assisted HUD 202 Facility for the Elderly
Columbus, OH, January 2, 2007 – Red Capital Markets, Inc. (MEMBER FINRA/SIPC), the investment banking entity of comprehensive capital provider RED CAPITAL GROUP, and Red Mortgage Capital, Inc., a top ten FHA and Fannie Mae mortgage lender, provided a creative financing package for an existing seniors housing community in California. The sponsor of the property is the Los Angeles-based not-for-profit Episcopal Housing Alliance (EHA). The financing involved the prepayment of a Section 202 loan pursuant to recent HUD notices.
St. John’s Manor, constructed in 1984 and located in Costa Mesa, approximately 40 miles south of Los Angeles, consists of 36 one-bedroom units in a 3-story, elevatored building. EHA approached RED to create a custom financing package to aid in their mission to preserve the HUD assisted senior housing community. As a result of the financing, the property will receive approximately $23,000 per unit for improvements, including the replacement of carpeting, flooring, ranges, refrigerators, and energy efficient windows, as well as the installation of new grab bars in the handicapped bathrooms. Site improvements will include project signage, and perimeter fencing replacement, along with refurbishment of the emergency call system, fire & life safety systems, and hydraulic passenger elevator cab. Further upgrades will include the replacement of washers and dryers at the laundry facility.
As part of the comprehensive transaction, Red Capital Markets, Inc. (MEMBER FINRA/SIPC) syndicated $2.1 million of 4% low income housing tax credits and acted as underwriter and placement agent for $4,025,000 of tax-exempt bonds issued by the California Statewide Communities Development Authority. Red Mortgage Capital, Inc. provided a 35 year fully amortizing FHA Section 223(f) credit enhancement to support the $2,280,000 senior tax exempt bond issue. The property also benefited from over $1.5 million in HOME funds provided by the City of Costa Mesa. Under the new sponsorship, all phases of St. John’s Manor will continue to benefit from Section 8 project-based rental assistance.
Joe Colletti, Ph.D., Executive Director of Episcopal Housing Alliance said, "Red Capital Group has demonstrated the type of dedication and community collaboration that it takes to pull a project together, and provide long-term debt and equity financing in order to restore and preserve affordable housing in Southern California."
Richard R. Andrews, Managing Director of Red Mortgage Capital, Inc. said, "It was a pleasure working with the Episcopal Housing Alliance as they recognized, from the beginning of this complicated refinancing and recapitalization process, the need to assemble a first rate team, who they managed expertly to consummate this transaction." Nicholas A. Hamilton, Managing Director of Red Capital Markets, Inc. added, "The transaction involved multiple funding sources, and the cooperation of the City of Costa Mesa, the State of California, and HUD was critical in helping EHA carry out its mission and serve the residents of Costa Mesa."
Evan E. Becker, Managing Director of Red Capital Markets, Inc. said, "Working with the Episcopal Housing Alliance allowed Red to continue helping HUD 202 owners successfully recapitalize and preserve these older properties. They are complex transactions, but in the end, the benefits for EHA will enhance their mission and also improve the lives of St. John’s residents for the long term."
