$19.4M Deal Alters Multifamily Bonds

HOUSTON-The 360-unit Concord at Palm Center in southeast Houston has leveraged a $19.4-million bond credit enhancement from Freddie Mac.

The complex at 5514 Griggs Rd. near the Medical Center is owned by Affordable Apartments of America, a Houston-based multifamily owner with a portfolio of five median-income properties. The group acquired the complex shortly after it delivered in 2001, using tax-exempt bonds from the Houston Housing Financial Corp.

Dennis D. Downey, loan originator for Mineola, NY-based PW Funding’s Dallas office, tells GlobeSt.com that Palm Center is leased to tenants who earn 60% to 80% of the city’s median household income of $59,600. The complex’s average unit is 1,055 sf in designs of one and two bedrooms.

Freddie Mac’s bond credit enhancement program delivered a 30-year loan with a 5% interest rate and debt service coverage of 1.12x with an LTV of 90%, Downey says, adding that it was a practically even swap on the dollar amount. The program changes the rating to Triple A. Downey says the transaction basically provides better underwriting and makes the bonds more valuable. Houston City Council and the Houston Housing Financial Corp. had to approve the package.