Jair Lynch Development Partners has closed on a $43.3 million recapitalization of Paul Laurence Dunbar Apartments, a 171-unit rental community for seniors, in Washington, D.C.
A self-proclaimed “urban regeneration company,” Jair Lynch has structured a complex package of debt and equity to facilitate the rehabilitation of the property located at 2001 15th Street NW in the U Street Corridor, a commercial and residential neighborhood in northwest Washington, D.C.
Renovations will begin immediately and include a new HVAC system and new elevator assemblies, lobby and common area finishes, handicap improvements, and approximately $25,000 per unit for kitchen, bath and finish upgrades. The development team includes Bozzuto Construction, WDG Architecture and Kettler Management.
“This will be our seventh project in and around the U Street Corridor in the last ten years,” says Jair K. Lynch, president of the company that bears his name. “We are proud to be a leader in the transformation of the neighborhood.”
Jair Lynch 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 seeks to acquire or develop 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 sq. ft.
The business plan is backed by a fully committed $120 million equity fund that is projected to leverage $350 million in investment activity.
Last year, Jair Lynch partnered with the Paul Laurence Dunbar Residents Association Inc. (PLDRA), a non-profit, to purchase the property. 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.
“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,” says Lynch.
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 District of Columbia’s 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 Ginnie Mae mortgage-backed securities.
PNC Real Estate provided equity in the form of Low Income Housing Tax Credits (LIHTC), which was bridged by the Enterprise Community Loan Fund through a collateralized bridge loan facility. The District of Columbia’s Department of Housing and Community Development provided the LIHTC allocation.
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.