Real estate firm Fairstead announced the financing of a 905-unit portfolio of subsidized housing across nine properties consisting of 49 buildings in New York City. Over the last six months, Fairstead has restructured the $430 million portfolio over nine transactions with $310 million in HUD-insured financing.
The portfolio was near conversion into market rate housing, but Fairstead collaborated with the NYC council members in the Brooklyn and Manhattan neighborhoods where the properties were located, as well as with the Department of Housing Preservation and Development (HPD) and the Department of Housing and Urban Development (HUD) in order to rehabilitate and preserve the affordable housing. Fairstead entered into new regulatory agreements with HUD to ensure that all 905 units will remain affordable for at least the next 40 years.
“Preserving affordable housing allows families to stay in their homes while giving new life to the buildings they live in,” said HPD Commissioner Louise Carroll. “HPD is proud to work with Fairstead to rehabilitate hundreds of homes across nine properties, protecting this valuable housing, and giving New Yorkers the security of knowing they can afford to stay in their communities for years to come.”
Fairstead secured financing for the portfolio through HUD-insured 223f loans, which allowed them to invest more than $35 million to upgrade all buildings with a full interior renovation of units and common areas. These renovations include new finishes, low-flow fixtures in all kitchens and bathrooms, sustainability measures to significantly reduce utility costs, handicap accessibility improvements, infrastructure upgrades and improved security and connectivity.
Will Blodgett, co-founder and partner at Fairstead, acknowledged the particular cooperation of NYC Council Members Laurie Cumbo, Carlos Menchaca, Bill Perkins, and Council Speaker Corey Johnson along with HPD and HUD for their support of these transactions, which have preserved affordable housing in their districts and jurisdictions.
“Affordable housing continues to be a scarce resource in this country, especially in New York. Public-private partnerships are key to creating and maintaining this affordability and Fairstead is proud to work with city council members and agencies alike who recognize the importance of preserving these affordable units and Fairstead's ability to bring about positive change. We are incredibly proud of the entire team, for without these partnerships, none of this would have been possible.”
The most recent transaction closed December 30th, a $46.4 million loan by Capital One and HUD. Last year, Fairstead completed a large-scale renovation of the property and introduced a social services platform as well as new amenities for residents, including a community room and enhanced connectivity services.
Fairstead is a socially responsible, fully-integrated real estate investor, developer, owner and operator specializing in affordable, mixed-income, and market-rate housing. Fairstead has acquired, developed or preserved nearly 15,000 units since inception. Fairstead currently owns 11,500 affordable, mixed-income and market-rate rental units across 14 states.
“At Fairstead, we are committed to bringing together all public and private partners to achieve the rehabilitation and long-term preservation of healthy, safe, and socially vibrant communities,” said John Tatum, partner at Fairstead. “This transaction further demonstrates our expertise in large scale, tenant-in-place rehabs. It also highlights our growing presence in the New York market.”
Fairstead's design and construction team will lead the full tenant-in-place rehab. The team has already completed Plaza Apartments and St. Nicholas Manor Apartments. The remainder of the portfolio is under construction and expected to be completed in 2020.
“Plaza Apartments is an example of a successful collaboration between NYC Council, HPD, and HUD,” said Majority Leader Laurie Cumbo of District 35 in Brooklyn. “I am very pleased that people who need affordable housing will get the quality that a brand-new upgrade allows, and the management accountability they so deserve.”
The financing was arranged by the FHA teams of multiple lending partners, including Truist, Greystone, Capital One, and Meridian Capital Group.