Cathedral Development Group closes on $44M refinancing
Cathedral Development Group, Inc. (CDG) of Providence, RI has closed on a $44-million refinancing on the Westward Ho Apartments, a 289 unit Elderly Designated affordable housing property in Phoenix, AZ.
The refinancing program on the project includes an FHA 221 D4 Substantial Rehabilitation loan, 9% Low Income Housing Tax Credits (LIHTC) and Federal Historic Tax Credits. The historic nature of the building, the substantial renovations, the planned social service programing and multiple sources of financing make the project unique and one of the first of its kind in the US. Robert Gaudreau, Jr., president of CDG, said, “What’s unique about this refinancing is that it is for a Nationally Registered historic structure located in the heart of downtown Phoenix within ¼ mile from the nearest light rail station and close to amenities. Additionally, the facility will offer residents health and social services through a unique partnership with Arizona State University (ASU) who will occupy the first floor of the Tower building on the property.” The genesis of the project began when, in March of 2014, the developers applied for 9% Federal Low Income Housing Tax Credits (LIHTC) through the State of Arizona’s Qualified Allocation Plan’s (QAP) competitive scoring process, and in June of 2014 was awarded a Reservation for these LIHTC through the Arizona Department of Housing (ADOH).
Gaudreau said, “The LIHTC landscape is very crowded today. When the program was first formed in the mid 1980’s only four or five would compete for the tax credits, today ten to fifteen entities compete for the same credits. And, the criteria has gotten very specific depending on a state’s particular needs whether it be more elderly housing, access to public transportation, set-a-sides for homeless, or more housing for native American Indians. So your project has to fill desired needs more than others and fortunately we were able to demonstrate this with the Westward Ho proposal.”
The loan restructuring involved multiple federal, state and local entities including three HUD offices (Phoenix, the Office of Recapitalization in Washington, DC and San Francisco); The City of Phoenix; an FHA loan through Berkadia Commercial Mortgage; and the equity syndicated through The Richman Group provided by Bank of the West and allocated through the ADOH.
The refinancing entailed working with multiple offices of the US Department of Housing & Urban Development (HUD) to re-subordinate their Mortgage Restructuring Note (MRN) through the Mark-to-Market program, the City of Phoenix to resubordinate their loan, proceeds from the FHA insured 221 D4 Loan and a significant source of non-HUD funds from tax credit equity (approximately $17.5-million).
The refinancing will include roughly $14-million in rehabilitation. Gaudreau said, “Select in-unit improvements will enhance the residents living experience and improve the desirability and marketability of the property. In addition to replacing select in-unit features such as kitchen cabinets, floors and fixtures. the project includes repairs and upgrades to windows and HVAC equipment in apartments, work on select roofs, central plant mechanical repairs and plumbing systems.”
The 16-story Westward Ho is a historically significant building. It opened as a hotel in 1928 and with the addition of the J-Wing Building in 1948 it grew to a 600 room full service premier hotel. With the exception of one building in Long Beach, California, the hotel was the tallest reinforced concrete structure west of the Mississippi. Its famous Thunderbird Room was added in 1951. The 1,000-seat dinner theater was the site for many grand Phoenix society receptions. In 1979, the 600-room hotel was converted to affordable housing.
“It is great to have companies such as PAG-CDG continues to invest in the community as they have done for nearly thirty five years,” said Councilman Michael Nowakowski, District 7.
The renovations on the project are expected to be completed by the end of 2016.