Property Type
Senior 202 Senior Housing
Location:
Houston, TX
Objective:
Refinance/Renovation
Financing Amount:
$10.34 million
Sources of Funding:
FHA loans insured by the Sec. 223(f) program
Closing Date:
Jan. 4, 2007

Background & Goals
Goldberg B’nai B’rith consists of two nine-story buildings built 24 and 28 years ago. Each offers 150 apartments dedicated to low-income seniors. Regular upgrades and recent major renovations, funded through a Community Development Block Grant, have kept the facility updated and comfortable.

But Goldberg B’nai B’rith was paying down two separate Section 202 loans at a fairly high interest rate. Additionally, the property had identified several projects that could improve its livability and energy efficiency and reduce maintenance expense.

Sources of Funding & Outcome
Lancaster Pollard structured and underwrote a $10.34 million refinance that combines Goldberg B’nai B’rith’s two Section 202 loans, reducing administrative burden and providing $1.34 million for immediate repairs. The transaction includes a $1 million initial deposit to the replacement reserve to assure funding for future needs and provide a cushion in case immediate repair costs run high. Combining the two loans and reducing the interest rate saves Goldberg B’nai B’rith $106,298 in annual interest expense.

Repairs of $1.34 million include new closet doors and mini-blinds in each unit, providing nicer resident amenities and reducing maintenance expenses. Other cost-saving changes include new PTAC units in one tower, replacement of 42 older stoves and 75 older refrigerators, and sprinkler system installation. Mechanical improvements include upgrades to the security system and elevator equipment.

Lancaster Pollard is an expert in refinancing Section 202 properties to fund repairs or restructure finances. In fiscal year 2006, according to HUD data, the firm refinanced more Section 202 direct loan dollars than any other lender in the country.