Gateway Apartments Everett, Washington

Prudential
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Gateway Apartments
Everett, Washington
Freddie Mac Targeted Affordable Housing Forward TELP execution
WE GET IT . DONE .
Disclosure
The information contained herein is provided by Prudential Mortgage Capital Company (“PMCC”). This document may contain confidential information and the recipient hereof agrees to maintain the confidentiality
of such information. Distribution of this information to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of these materials, in
whole or in part, or the divulgence of any of its contents, without the prior consent of PMCC, is prohibited. Certain information in this document has been obtained from sources that PMCC believes to be reliable as
of the date presented; however, PMCC cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of
the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. PMCC has no obligation to update any or all of such information; nor do we make any express or implied
warranties or representations as to its completeness or accuracy. Any information presented regarding the affiliates of PMCC is presented purely to facilitate an organizational overview and is not a solicitation on behalf
of any affiliate. Past performance is not indicative of future results. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any
investment management services. These materials do not constitute investment advice and should not be used as the basis for any investment decision.
These materials do not take into account individual client circumstances, objectives or needs. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular
clients or prospects. The information contained herein is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. Any discussion of risk management is
intended to describe PMCC’s efforts to monitor and manage risk but does not imply low risk.
These materials do not purport to provide any legal, tax or accounting advice. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to
local law or regulation.
All sources are Prudential Internal unless otherwise noted. Prudential, the Rock symbol, and the Prudential logo are service marks of Prudential Financial, Inc. and its related entities.
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Rendering
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Gateway Apartments
Transaction Summary
Loan Amount:
$29,798,000
Loan Term:
15 years
Amortization:
35 years following conversion
Forward commitment period: 24 months + 6 months
Interest rate:
4.625% (locked at construction closing)
Prepayment:
10 year Lock Out, then YM, 6 months prior to maturity
prepayable at 1% for 3 months, then open at par
LTV and DSCR
Program: 90%/1.15; Actual: 80%/1.15
Value:
$210,000 per unit; 5.5% cap rate
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Regulatory Restrictions
•
•
•
•
•
•
•
4% LIHTC
Rent and income restricted at 60% of AMI or less
Includes 36 units set aside for large families and 36 units for disabled
Extended regulatory period of 30 years (15 + 15)
Tax Credit regulatory agreement terminates three years after foreclosure or deed in lieu of foreclosure.
Bond regulatory agreement restricts minimum of 40% units earning 60% of AMI or less
Tax exemption pursuant to Washington Exemption of ownership with non profit status – RCW Section
84.36.560. For full exemption, statute requires at least 75% of units are occupied by very low income
household (50% AMI). If less than 75%, the property receives a partial exemption
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Property Description
177 units including two, three and four bedroom units.
Garden and townhouse style units. Two and three stories
Garages (27)
On site amenities include clubhouse/rec center with fitness room, indoor basketball,
business center, conference center, activity room, lounge, and leasing.
• No A/C (typical for this market)
• Total construction costs of $283,000 per unit, $150,000 per unit of hard and land
improvements only.
•
•
•
•
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Rent Conclusions
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Sources and Uses
Sources
Freddie Mac Loan
29,798,000
Tax credit equity
13,176,643
NOI through stabilization
1,344,462
Deferred developer fee
5,879,412
50,198,517
Uses
Land
Hard Costs
5,670,000
30,355,598
Reserves
2,124,896
Soft Cost
5,590,390
Developer Fee
6,457,633
50,198,517
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Strengths
Underwritten restricted rents are discounted to market at 31%
Strong sponsorship with high net worth and liquidity
Strong affiliated management company
Class A asset, new construction
Strong market fundamentals with significant growth in the market rate rental sector
thereby increasing the need for discounted affordable housing.
• Subject’s overall capture rate was 1.7%, and penetration rate was 20.6%.
• Lease up pace of 21 units per month projected
•
•
•
•
•
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Risks
• Ability to secure 75% of the abatement which was assumed in our underwriting
• Degree of new construction in submarket overall of 1900+ units, but only 450 LIHTC
units proposed.
• Stabilized occupancy within an aggressive timeline (expected to stabilize four months
following completion)
• Underwritten rents are at the maximum restricted rent levels
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Unique characteristics
• Freddie Mac allowed the lender to underwrite 75% of the abatement despite fact
restrictions are at 60% of the AMI given the experience of the developer.
• Freddie Mac permitted borrower to have the option to obtain additional loan proceeds
at conversion if the area median income increases prior to stabilization which results in
increase in rents and GPR. Any increase in proceeds cannot exceed 10%, subject to a
new appraisal to support any increase in rents.
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Product pictures
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Product Pictures
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Product Pictures
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
Product Pictures
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .
WE GET IT . DONE .
PRUDENTIAL MORTGAGE CAPITAL COMPANY
Confidential. Not for further distribution.
WE GET IT . DONE .