Grace Apartments is a 102 unit, 99% Section 8 senior apartment property located in downtown Providence. Its prime location just off I-95 and on the edge of the city’s booming “Downcity” district made it a potential market-rate conversion candidate, but a faith-based seller selected POAH to purchase the property based on its strong preservation track record.
Grace was POAH ’s first project using the HUD Section 221 (d)(4) program, which provides both the construction and the permanent financing in a single loan. Structuring the transaction in this way eliminated the risk of a change in interest rate, and streamlined the underwriting criteria. The property also benefits from a partial real estate tax abatement from the City of Providence under Rhode Island’s Chapter 44-5 statute, which is critical since it mitigates what would otherwise be a significant operational risk.
POAH ensured continued affordability by working with HUD to renew the Section 8 rental subsidy contract, and made over $3.5 million in capital improvements to the building complex. The rehabilitation included full window replacement, corridor ventilation, modernized kitchens and baths, common-area improvements, and life-safety upgrades – including the installation of fire sprinklers in all apartments.
POAH’s Asset Management team closed a refinancing of the previous FHA 221(d)(4) loan with a new FHA 223(a)(7) loan on Jan 23, 2018. The refinance was completed in order to realize interest rate savings which will translate to over $92,000 in annual debt-service savings - thereby bolstering the property’s operational outlook for the long term.
- Rhode Island Housing
- Red Capital Group
- Boston Private Bank & Trust Company
- US Department of Housing and Urban Development (HUD)
- Massachusetts Housing Investment Corporation (MHIC)