Mt. Hermon is a 90 unit property originally developed under the HUD Section 202 direct loan program. NHT Communities, a Washington DC based nonprofit developer and owner, acquired the property in order to recapitalize and preserve it for long-term affordability. In addition to the 221(d)(4) loan, the property is financed with 4% LIHTC provided by National Affordable Housing Trust, an equity bridge loan from Virginia Community Capital, and a grant from the City of Portsmouth.
As with most projects, today, rising interest rates and increased construction costs stressed Mt. Hermon’s capital stack. In addition to value engineering the rehab scope, BWE worked with NHT Communities, the general contractor and HUD to order major building components in advance. The contractor was able to avoid supply chain issues and obtain materials at a lower price, thereby mitigating the risk of further construction cost increases and avoiding a future financing gap.
“Portsmouth has a substantial number of severely rent burdened residents and about half of them are seniors. NHT’s preservation of Mt. Hermon will provide an attractive and affordable home for current and future residents. Special thanks to the whole development team including HUD for being creative with acquiring construction materials early in the process. This action allowed the project to be economically feasible.” said Tony Love, Senior Vice President and Senior Originator at BWE.
For more information on Mt. Hermon Village, please email Tony at tony.love@bwe.com. Also, for more information on navigating the challenges of rising construction costs, please click here.