New York, NY — October 20, 2023 — Lument today announced the closing of a $78.8 million refinance via the U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) Sec. 223(f) program for The Hub, a 590-unit multifamily community located in Bowling Green, Kentucky. Ryan Duling, a senior managing director based in Columbus, Ohio, led the transaction.
“We were excited to help our client close one of the first transactions that leverages recently updated policy regarding large loan risk management,” said Duling. The transaction takes advantage of an increase in the large loan threshold, which was raised to $120 million from $75 million. “The change is proving prudent immediately, as our clients will benefit greatly from the ability to utilize lower debt service coverage ratio limits while structuring permanent FHA financing.”
The policy change was announced in HUD Mortgagee Letter 2023-14 in June 2023 and is the first increase since 2014.
The $78.8 million FHA refinance replaces short-term debt with beneficial long-term financing at a low, fixed interest rate. The transaction reduces annual debt service, establishes a sizeable replacement reserve account, and provides substantial proceeds for renovations. In addition, the transaction qualified for a mortgage insurance premium (MIP) deduction of 0.25% due to its green classification.
Constructed in 2020, The Hub’s garden-style community consists of 42 apartment buildings centered around a central park landscape. Housing options are designed for those with an active, outdoor-focused lifestyle and feature ample amenities, including pickleball courts, a kids splash pad, a pet park, and resort-style pools with multiple pavilions and lounge areas, as well as food and beverage service.
