Opportunity Zone Development Receives $21 Million in Construction Financing via Walker & Dunlop
BETHESDA, Md., June 6, 2019 /PRNewswire/ -- Walker & Dunlop, Inc. announced today that it arranged a $21,086,700 construction loan for Kodak Crossing in Kodak, Tennessee. The new multifamily property is being developed by longtime client VITA Development Group, Inc., and will be located within the bounds of Sevier County, one of Tennessee's designated opportunity zone census tracts. The transaction represents one of the first opportunity properties financed with the United States Department of Housing and Urban Development (HUD).
Established by Congress in the Tax Cuts and Jobs Act of 2017, opportunity zones are a new, nationwide community investment tool that encourages long-term investments in designated low-income areas. Under this program, investors and developers who place unrealized capital gains into dedicated opportunity funds are eligible to receive incentives in the form of lower or deferred capital gains taxes.
Led by Managing Directors Keith Melton and David Strange, Walker & Dunlop arranged the loan through HUD's 221(d)(4) new construction program, which includes both construction and permanent financing in a single loan and mitigates interest rate risk for the developer. The program is also an ideal financing structure to take advantage of opportunity zone benefits, which requires that the developer holds the asset for a minimum of ten years. HUD has also begun prioritizing and offering lower fees for opportunity zone projects. The team worked closely with VITA Development to ensure the terms of the financing were consistent with opportunity zone guidance, securing a two-year construction term followed by a 40-year, fully amortizing, fixed-rate loan.
Mr. Melton commented, "We're proud to have arranged this complex and unique transaction. Our experience as a HUD partner has certainly played a part in our ability to lock in low rates, secure extended financing, accelerate processing, and provide confidence in execution."
Situated 15 miles east of Knoxville and nestled in the foothills of Great Smoky Mountains National Park, the town of Kodak recently suffered a series of forest fires, causing significant destruction of the local infrastructure as well as a deficit of housing. Once complete, Kodak Crossing will offer 192 affordably priced units ranging from one to three bedrooms and will alleviate some of the current housing supply strain. The pet-friendly workforce housing complex will be located behind local retailer and employer Bass Pro Shops.
Walker & Dunlop is one of the largest multifamily lenders in the country and is ranked as the third largest HUD lender based on MAP (Multifamily Accelerated Processing) volume for the agency's 2018 fiscal year. To learn more about opportunity zones, read our recent insights here:
About Walker & Dunlop
Walker & Dunlop (NYSE: WD), headquartered in Bethesda, Maryland, is one of the largest commercial real estate finance companies in the United States. The company provides a comprehensive range of capital solutions for all commercial real estate asset classes, as well as investment sales brokerage services to owners of multifamily properties. Walker & Dunlop is included on the S&P SmallCap 600 Index and was ranked as one of FORTUNE Magazine's Fastest Growing Companies in 2014, 2017, and 2018. Walker & Dunlop's 700+ professionals in 29 offices across the nation have an unyielding commitment to client satisfaction.
SOURCE Walker & Dunlop, Inc.
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