Date: September 2019
Location: Cleveland, Ohio
Financing Amount: $13.6 million
Financing Type: Non-recourse loan through Fannie Mae
Scope: 102 units
Building on a decades-long relationship with the sponsor, PNC Real Estate facilitated a cash-out financing of the Residences at Hanna, a downtown Cleveland, Ohio, property with a unique ownership structure. The deal included Federal Historic Tax Credits.
In addition to 102 residential units, the building offers approximately 10,000 square feet of first floor commercial space and an adjacent 135-space parking lot.
PNC Real Estate had funded the building’s acquisition and redevelopment in 2012 with a direct loan and leveraged loan in a New Markets Tax Credit financing structure.
Key principals for both deals are Douglas E. Price III, Karen M. Paganini, and Old Village Properties, Ltd. The Residences are managed by K&D Management, LLC, which is owned by the key principals. K&D Management manages more than 40 properties with over 13,000 units located in the Northern Ohio area.
Built in 1920, the historical landmark property has a master lease for the first floor and contains a theater owned by a separate foundation. Working through the legal aspects of the deal and getting Fannie Mae comfortable with the complicated ownership proved to be time consuming. And the deadline was tight.
Working day and night, PNC Real Estate delivered a transaction that facilitated the cash out refinance of the high rise. Federal Historic Tax Credits were invested in the project as $2 million of equity and a $2.4 million loan. On the day prior to closing, the Historic Tax Credits were “Put” to the Sponsor to unwind the $2,000,000 of equity.
In discussing the deal, Karen Paganini, president and COO of K&D Management, noted, Our long-term relationship with PNC Real Estate, their familiarity with the property from a prior deal and expertise in tax credit equity delivered ease of execution even though the transaction was complex.