$43.3 Million Venture Preserves Affordable Senior Housing in Thriving U Street Corridor
Washington, DC -- JAIR LYNCH Development Partners (“JAIR LYNCH”) executed Phase II of its master plan for The Paul Laurence Dunbar Apartments (formerly known as Campbell Heights Apartments), a 171-unit rental community for senior citizens located at 2001 15th Street NW, when it closed on a complex financing package to renovate the 40 year old property.
JAIR LYNCH partnered with the Paul Laurence Dunbar Residents Association, Inc. (“PLDRA”), a non-profit, to purchase the property last year when PLDRA exercised its rights under the District of Columbia Tenant Opportunity to Purchase Act (TOPA) after the prior owner notified tenants of its intent to sell the property. Over the past year, JAIR LYNCH structured a complex package of debt and equity to facilitate the rehabilitation of the property.
“This will be our seventh project in and around the U Street Corridor in the last ten years” noted Jair K. Lynch, company president. “We are proud to be a leader in the transformation of the neighborhood. We have created the long term commitment to affordably priced, transit-oriented, quality senior housing that we and PLDRA originally envisioned and our joint efforts facilitated.”
The new financing package includes Housing Revenue Bonds insured by the U.S. Department of Housing and Urban Development through the Federal Housing Administration’s 221(d)(4) mortgage insurance program. The tax-exempt bonds were issued by the DC Housing Finance Agency as part of the U.S. Treasury Department’s New Issue Bond Program (‘NIBP’). The NIBP program was implemented under the Housing and Economic Recovery Act of 2008. The debt package also includes taxable GNMA mortgage backed securities.
PNC Real Estate provided equity in the form of Low Income Housing Tax Credits (LIHTC), which was bridged by Enterprise Community Loan Fund via a collateralized Bridge Loan facility. The LIHTC allocation was provided by the DC Department of Housing and Community Development. HUD also extended the existing Section 8 contract for 20 years, allowing the property to further help seniors most in need. In addition, the project secured a 40-year real estate tax abatement from the District of Columbia. Deustche Bank Berkshire Mortgage served as the mortgage banker, Holland & Knight was counsel and the Reznick Group was the financial structuring and tax advisor.
Renovations will begin immediately and include a new HVAC system, new elevator assemblies, lobby & common area finishes, ADA improvements, and approximately $25,000 per home for kitchen, bath and finish upgrades. The development team is comprised of Bozzuto Construction, WDG Architecture and Kettler Management. The residents will continue to enjoy services and amenities such as a community room, computer training center, resident services coordinator, free shuttle service, and complimentary lunch twice a week. Residents will also be protected by a new affordable housing covenant lasting 30 years.
JAIR LYNCH Development Partners is investing in Paul Laurence Dunbar Apartments through a joint venture with MacFarlane Partners, a real estate investment management firm that specializes in properties that promote smart growth, urban revitalization and sustainability. The venture is dedicated to acquiring and/or developing urban infill projects of $10 to $60 million in the greater Washington D.C. area, including for-sale and for-lease multifamily housing up to 250 units, mixed-use, and commercial space up to 250,000 square feet. Targeted investment types are value-add, opportunistic and new development. The business plan is backed by a fully committed $120 million equity fund that is projected to leverage $350 million in investment activity.