Ulin House

$43.6 Million

HUD 221 (d)(4) – Acquisition/Substantial Rehab



The Real Estate
Originally developed under the “SH” Section 202 direct loan program in the late 1960’s, this 242-unit senior project is assisted by a project-based Section 8 contract with rent levels well below market levels. While the propertyhad been well maintained, it was in need of substantial rehabilitation given the early date of construction. The resident population was aging in place, creating an increasing need for additional supportive services.

The Client’s Objectives
The client sought a recapitalization that would generate sufficient funds to substantially rehabilitate the project, provide on-going funding for increased supportive services for its senior residents, and produce equity proceeds for future affordable housing development endeavors.

The Financing
The transaction was structured as an identity-of-interest sale to a nonprofit-controlled for-profit affiliate using the Section 221(d)(4) Substantial Rehabilitation Loan Program. The Section 202 mortgage was prepaid pursuant to HUD Notice 2012-8, and the Section 8 Contract was renewed for 20 years under the Mark Up to Market (“MUM”) Program at post-rehab rent levels. This structure allowed the mortgagor to generate the loan proceeds needed to fund over $80,000 per unit in substantial rehabilitation, a significant developer’s fee, and equity proceeds. The MUM renewal also eliminated the prohibition on distributions, allowing the mortgagor to distribute 100% of future cash flow so that it could be used for the benefit of the residents and to support the mission of the nonprofit sponsor.

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