Greystone Affordable Development Closes $62.6 Million Affordable Housing Redevelopment in Michigan
Greystone Affordable Development, a leading affordable housing developer, closed a $62.6 million transaction that refinances and renovates 384 affordable housing units in Michigan. Owned by PK Companies LLC, the units are spread across 10 properties in nine different counties. The recapitalization and rehab are made possible by pooling $19.7 million in bonds statewide, refinancing $24 million in USDA-issued debt, and additional equity from tax credits, among other sources, to ensure permanent affordability for the residents.
Greystone’s affordable housing preservation group worked closely with USDA’s Rural Housing Service (RHS) Michigan State Offices, as well as the Michigan State Affordable Housing Corporation to coordinate and secure the financing needed to acquire and rehabilitate this at-risk and much-needed housing. The financing sources include:
- Tax-Exempt Bonds - Single issuance of $19,683,000 in multifamily private activity tax-exempt bonds by Michigan State Housing Development Authority.
- Senior Debt - $2,741,000 in long-term debt comprised of USDA 538 Guaranteed Loans, provided by Greystone Servicing Company LLC.
- RHS 515 Debt - Assumption and subordination of $16,625,000 of original USDA Section 515 debt. The Section 515 program is a direct loan program designed to provide subsidized loans to developers of affordable housing in rural markets.
- RD Debt – Assumption of $7,491,938 in USDA RD debt.
- Low Income Housing Tax Credits - Purchase of 4 Percent Housing Credits by National Equity Fund, generating $9,754,727 in capital contributions.
- Other sources including seller’s note, replacement reserves, and insurance proceeds totaling $6,280,536.
With the financing in place, the rehabilitation plan includes a fast-paced construction process, estimated to be complete within 16 months, during which no residents will be permanently displaced. Substantial renovations, averaging $38,599 per unit, will include both interior and exterior improvements.
“We embarked on this journey well before the pandemic, and it’s truly a testament to the Greystone Affordable Development team’s dedication and commitment that we are now seeing a successful end to our recapitalization,” said Ronald J. Potterpin, President, PK Companies LLC. “We can’t wait to get started with Greystone on renovating these homes for our hundreds of residents, as they are spending more time at home than ever these days, and they deserve safe and clean affordable housing just like anyone else. We are thrilled to continue working with Greystone to rehabilitate our portfolio.”
“Working with PK Companies LLC has been gratifying since we have seen first-hand how much they care about their residents’ experience and well-being,” said Tanya Eastwood, head of Greystone Affordable Development. “After doing many of these redevelopment projects, I can say that the end result when residents see their new homes is worth all of the complex work to get to that point. It truly is a team effort, and we thank all of our partners in this process for their contributions.”
“We are thrilled to have played a role in the preservation of critical affordable housing across Michigan,” added Chad Benson, Director of Development, Michigan State Housing Development Authority. “We commend the deal team for their perseverance throughout the pandemic and their commitment to ensuring that Michigan residents receive upgraded and stable housing for the long-term.”