Elan at Terra Bella

Sims Mortgage Funding (SMF) Closes $26,172,500 Loan for New Multifamily Rental Housing

“When you work with a mortgage banker for 15 years they become as much a part of your team as your architects, engineers and contractors. Sims has consistently delivered positive results and have closed deals that otherwise would have never happened. Their knowledge of each HUD program is unsurpassed, and it is very obvious that every HUD office they have worked with has the utmost confidence and respect for their team. With the respect from the different offices, they are able to reach out to the higher levels of HUD to solve problems. We look forward to working with Sims for many years to come, and we strongly recommend them to any company interested in completing a HUD loan.” 

David Alexander, Managing Partner, Vintage Realty Company

Partnered Right
  • Vintage Realty Company purchased the development rights for Elan at Terra Bella, a proposed 178-unit market-rate project in a Traditional Neighborhood Development (TND). Given Vintage’s preference for long-term, fixed-rate financing, they turned to SMF to obtain HUD-insured construction and permanent financing.
Structured Right
  • SMF worked with HUD and Vintage to provide additional risk mitigation during the loan underwriting and closing process that enabled HUD to approve the deal and to get to closing before the financing commitment deadline expired.
Executed Right
  • The timeframe from submission of the mortgage insurance application to closing was slightly under 7 months. The loan covered 85% of the Project’s replacement cost, excluding working capital and stabilization costs.
Financed Right®
  • SMF has closed 23 HUD-insured loans, totaling close to $350 million, for Vintage since 2002.
Partnered Right

Vintage Realty Company, a major regional developer and property manager headquartered in Shreveport, LA, purchased the development rights to Elan at Terra Bella, a proposed 178-unit market-rate multifamily project in a Traditional Neighborhood Development (TND) on the North Shore, one of the fastest-growing sections of the New Orleans metropolitan area. Given Vintage’s preference for long-term, fixed-rate financing, they turned to SMF to obtain HUD-insured construction and permanent financing.

Structured Right

Sims and Vintage were faced with two significant challenges: a temporary change in housing market conditions after HUD issued its preliminary approval of the deal, and a notice from HUD that the project’s general contractor couldn’t post payment and performance bonds with dual insurers, as they had done on prior projects. HUD, SMF and Vintage collectively developed risk mitigation plans to address these concerns that enabled the loan to close before the deadline expired on the financing commitment. The bond risk mitigation was structured to be partially released post-closing at certain milestones during construction, or immediately released should HUD reinstate its prior policy regarding dual sureties. The Project was designed to meet green building standards as a result, it has a .25% annual mortgage insurance premium (MIP), .40% lower than the typical program MIP.

Executed Right

The $26,172,500 loan was insured under the Section 221(d)(4) program and was underwritten at 85% of replacement cost. The loan features a 40-year amortization commencing 4 months after construction and a fixed interest rate of 4.00%. The debt service coverage ratio is 1.176.

Financed Right®

SMF successfully obtained construction and permanent financing for a start-up project at a competitive, fixed, long-term interest rate and on better terms than were available through commercial financing options. HUD mortgage insurance is an excellent source of capital for the development of market-rate rental housing and, under certain conditions, age-restricted senior housing. It is also a competitive source of capital to refinance or acquire existing projects and to expand or renovate existing, HUD-insured properties with supplemental financing.

For more information, please contact Kerrie Tomasiewicz at (201) 307-9383 (ktomasiewicz@nullsimsmortgage.com).

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