MidHudson Completes First HUD Reserve Funding Program Transaction
MidHudson LLC has closed the inaugural transaction in its groundbreaking HUD Reserve Funding Program for 221(d)(4) loans, helping to complete the financing of The Venue at Werner Park in Papillion, NE. MidHudson made a preferred equity investment to support letters of credit used to meet the required working capital and initial operating deficit reserves. The developer was Graham Development, an Austin, Texas-based full-spectrum property development firm.
MidHudson was launched in June 2018 to offer developers a quality solution to the capital requirements of posting reserves for HUD financed developments. The HUD Reserve Funding Program reduces the amount of equity required for a project and, as a result, increases equity returns — making it easier to raise that reduced amount of equity.
Graham Development Partner, Corbin Graham, said, “MidHudson allowed us to complete the financing of The Venue at Werner Park much more quickly. They also improved the returns to our equity investors because the MidHudson investment is more cost effective than raising more equity. Joe Carroll, Kory Geans and the rest of the MidHudson team were knowledgeable, adaptable and efficient. They have made their product very user friendly. Frankly, I expect almost every developer that understands their product to use it.”
Regarding the completion of the first transaction, MidHudson President Joseph Carroll stated, “It is gratifying to see something come off the drawing board and into the real world. It was particularly rewarding to see our product allow the quality team at Graham Development to complete their financing and start their project. We are pleased to have made a difference helping Graham Development get shovels in the ground more quickly and in a more financially efficient manner.”
Mr. Carroll continued, “We believe that the HUD Reserve Funding Program has broad appeal regardless of the size of the developer or the stage of a particular project. With developers, we are working on transactions with both smaller firms that need us to provide the last piece of their financing puzzle and with larger ones that have plenty of access to financing but recognize that we can improve their financial performance metrics. In terms of specific transactions, we’re relevant across the development lifecycle. We are in discussions both with developers who have recently received or are about to receive their HUD firm commitment, as well as with developers who want capital commitments now for transactions that are expected to close months from now. We are also having a lot of success with developers that are using MidHudson to replace their current reserves — we can provide what is effectively a “cash out refinancing” for reserves on recently closed 221(d) (4) transactions.”
About MidHudson: MidHudson LLC provides a solution — the MidHudson HUD Reserve Funding Program — that satisfies the reserve requirements for developers using HUD 221(d)(4) financing. MidHudson was founded by multifamily developer, Chris Finlay, of Middleburg, to meet the needs of developers within the affordable and market rate apartment sector based on Middleburg’s experience using HUD financing. MidHudson addresses the roadblocks often experienced by 221(d)(4) borrowers by offering a streamlined product to provide the required reserves, typically reducing the amount of equity required from the developer by about 30%, and increases project IRRs by 6% to 8%. In today’s challenging lending environment, MidHudson believes that its program will allow greatly needed multifamily projects to be built that otherwise would not be. For more information, please visit www.MidHudsonRE.com.