New York, NY — July 21, 2022 — Lument has announced the closing of a $29 million U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) Section 223(f)-insured loan to refinance a large multifamily community in Southeast Wisconsin. James Kress, director with Lument in Columbus, Ohio, led the transaction.
In executing the transaction, Lument was able to take advantage of recent HUD guidance that allows borrowers to seek FHA permanent financing within three years of construction completion.
“The FHA 223(f) program under the new three-year guidance proved to be an ideal solution for the borrower, as it allowed them to recoup much of their own equity that was used for construction, which they plan to use for future development opportunities,” said Lument’s Kress. “In a time of rising construction costs and interest rates, the ability to self-fund the bulk of the costs and refinance within three years gave the client a substantial competitive advantage.”
In addition to putting in place long-term debt at a low, fixed interest rate, the transaction also establishes a replacement reserve account with a sizeable initial deposit. The closing marks the sixth FHA loan Lument has closed with this developer group, and the average overall interest rate across the portfolio is notably low.
“Timeliness was also a key aspect of this deal,” Kress added. “We were able to move nimbly and push the transaction forward quickly, which ultimately allowed the borrower to lock in a highly favorable interest rate just days before rate increased significantly.”
ORIX Real Estate Capital Holdings, LLC, d/b/a Lument, is a subsidiary of ORIX Corporation USA. Lument is a national leader in commercial real estate finance. As the combined organization of legacy industry experts Hunt Real Estate Capital, Lancaster Pollard, and RED Capital Group, Lument delivers a comprehensive set of capital solutions customized for investors in multifamily, affordable housing, and seniors housing and healthcare real estate. Lument is a Fannie Mae DUS®, Freddie Mac Optigo®, FHA, and USDA lender. In addition, Lument offers a suite of proprietary commercial lending, investment sales, investment banking, and investment management solutions. Securities, investment banking, and advisory services are provided through OREC Securities, LLC, d/b/a Lument Securities, Member FINRA/SIPC. Investment advisory services are provided by OREC Investment Management, LLC, d/b/a Lument Investment Management. OREC Investment Management is registered as an investment adviser with the U.S. Securities and Exchange Commission. For more information, visit www.lument.com.