Initiative Capital has closed on a $400,000 loan to Laurel Street Residential to help finance the construction of affordable housing for seniors in Belmont, just west of Charlotte.
The Loftin at Montcross senior apartments, targeting moderate-income seniors and developed in partnership with the Southern Benedictine Society, are designed to address an acute shortage of affordable housing for seniors in the region.
Gaston County’s affordable age-restricted apartment communities only have 800 total units. These are primarily tax credit units offering affordable rents to the elderly. The vacancy rate for affordable age restricted apartment developments is typically below 5%, and there is a growing need for many more units in the area. Some estimates indicate that by 2020, over 50% of all households 55 and older in the county are projected to have an average annual income of under $50,000.
Unfortunately, however, there are currently no other new communities planned in Gaston County for seniors. Moreover, there are only five multi-family projects for seniors planned for neighboring Mecklenburg County, all of which will be privately- run assisted living services with entry fees that range from $15,000 to $600,000 and higher monthly rents than many area seniors can afford.
The Loftin at Montcross project will help reverse this trend. It is located at the monastery at Belmont Abbey and is being developed in two phases. Phase I, with 74 units, is already complete, has 100% occupancy and a waiting list of 145 individuals.
Initiative Capital’s investment helped us close a funding gap at the Loftin at Montcross Phase II project in Belmont, as the loan will help Laurel Street leverage more than $10.4 million in FHA loan financing from HUD and over $2.5 million in private equity financing. More importantly, this partnership will enable us to address the acute lack of housing that is affordable to seniors in the region. We appreciate the chance to work together with Initiative Capital to find creative solutions and make projects happen. – Dionne Nelson – President and CEO, Laurel Street
Phase II will include construction of 98 one and two bedroom apartments within a four-story building, with surface parking, elevators and enclosed corridors. The total development cost of Phase II is $12.7 million. The bulk of the financing will be provided through a HUD 221(d)(4) loan, but Laurel Street faced a $400,000 funding gap during the construction period that had to be closed in order to obtain the HUD funding.
Working in close collaboration with Laurel Street and with a great deal of creativity from both parties, Initiative Capital was able to provide the additional capital needed to close this funding gap so that the project will be able to proceed.
Closing this transaction is more than just another loan for Initiative Capital. It is clear evidence of our innovative leadership in community and economic development lending. Dionne knew Initiative Capital’s collaborative approach to flexible financing would allow for a creative solution to the funding gap Laurel Street faced with Phase II of the Loftin at Montcross project. We appreciate the opportunity to partner with Dionne and Laurel Street again and look forward to future brainstorming sessions on how to fill the gap and help finance the next big development. -Tara Campbell, Sr. VP of Lending and Investments, Initiative Capital
Initiative Capital has worked with Laurel Street to bring affordable housing to other communities as well. Our financing has helped to support several affordable housing projects including in Winston-Salem, High Point, Charlotte, Salisbury and New Bern.
Laurel Street Residential, based in Charlotte, is a minority and female-owned firm with a strong track record of building high quality affordable housing across the state and region. The company has successfully completed the development of 800+ units, with an equivalent amount currently in pre-development.