Residential Plaza at Blue Lagoon

sims mortgage funding closes hud-insured loan for residential plaza at blue lagoon, miami, florida

In late June, Sims Mortgage Funding (SMF), our mortgage banking subsidiary, closed a $12,118,600 HUD-insured loan under the Section 232/223(f) program for Residential Plaza at Blue Lagoon, an existing 350-bed licensed assisted living facility oriented to moderate and low income Hispanic elderly. Proceeds of the 35-year insured loan, which was funded with taxable GNMA securities, were used to retire four existing short-term loans, fund an initial deposit to a reserve fund for replacement and cover transaction costs. The borrower, a community-based not for profit, now has a long term capital structure in place that will allow it to continue its mission of serving low and moderate income elderly well into the future.

Residential Plaza

Because the insured loan to value ratio was considerably below HUD's maximum 90% threshold for non-profit borrowers, SMF was able to structure the transaction under more favorable terms to the borrower; unlike most not for profits, they will be able to access "surplus cash" from operations instead of having to leave it in the project. This little-used feature of HUD's mortgage insurance programs applicable to not for profit borrowers will give the project considerably more operating flexibility in the future.

Residential Plaza, a fourteen-story high-rise structure, was built in 1990 as an elderly housing project and utilized low income housing tax credits. In fact, this former aspect of the project caused some anxious moments before the closing, as there was a conflict among the state housing agency, the IRS and HUD over an interpretation of the existing low income use agreement. Fortunately, SMF was able to keep all parties talking until an agreement was reached that led to the closing.