Morgan Stanley Provides Financing to Kick-Start Preservation of Distressed Residential Buildings in the Bronx
Financing Will Help Four of New York City’s Most Distressed Multi-family Residential Properties to Undergo Eventual Rehabilitation
Jun 4 2012 | New York
Morgan Stanley (NYSE: MS) has provided multi-million dollar interim financing to Workforce Housing Advisors, Inc. (WFHA) to make possible the rehabilitation of four multi-family buildings with 120 units in the Bronx.
The four buildings, located at 2239, 2241, 2323 and 2333 Creston Avenue, have deteriorated significantly in recent years, amassing building code violations, as well as municipal liens and fines.
The buildings, which are occupied, have been placed in the New York City Department of Housing Preservation and Development’s (HPD) Alternative Enforcement Program, which annually targets the 200 most distressed multi-family residential properties in the City for intervention. WFHA, in partnership with the NYC Partnership Housing Development Fund Company Inc., a not-for-profit housing development fund company, has taken ownership of the buildings.
The interim financing provided by Morgan Stanley allows WFHA to pay down the municipal arrears and move forward with preparations to renovate the buildings. HPD expects to provide a low-interest loan through its Preservation Participation Loan Program, in conjunction with more conventional financing and Low Income Housing Tax Credits, to fund the rehabilitation of the properties and preserve them as affordable for current and future tenants. In the last two years, this type of public-private financing in partnership with HPD has stabilized 1,500 units in comparably distressed and overleveraged properties, effectively preserving the housing as affordable over the long term.
“We appreciate Morgan Stanley's leadership in stepping up to partner with us on this project,” said John A. Crotty, founding partner of Workforce Housing Advisors. “Their support will allow us to take the critical first step of a long-term process to transform four buildings in the Bronx in significant need of rehabilitation and make a substantial difference in the lives of the working families who reside there.”
Said Audrey Choi, Head of Global Sustainable Finance at Morgan Stanley: “We are committed to supporting affordable housing in our communities. We see this as a unique opportunity to improve the living conditions of families and individuals in need of sound, affordable housing in the Bronx.”
Part of the financing provided by Morgan Stanley allows for payment to the City of three-quarters of a million dollars to clear liens due to unpaid taxes, municipal charges and emergency repair expenditures. Without the new financing, the high holding costs would have continued to burden the properties, further delaying the shift to rehabilitation.
“It takes many steps and many partners to rescue and restore distressed affordable housing,” said HPD Commissioner Mathew M. Wambua. “The buildings on Creston Avenue have miles to go before their tenants will be able to feel comfortable and secure. But we are on the right path – and welcome Morgan Stanley as a new partner in our ongoing efforts to preserve the City’s existing multi-family housing stock. The financing they have provided has kick-started the turnaround process, and that is a commitment for which we are gratified. More importantly, by making this commitment, they agree as we do, that financing housing in our City is a very sound investment in our collective future.”
In the last two years, HPD financing has stabilized 1,500 units in distressed and overleveraged properties, including two other transactions with Workforce Housing Advisors, with 174 more distressed units slated to begin construction by the start of the summer.
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About the NYC Department of Housing Preservation and Development (HPD)
About Workforce Housing Advisors
Contact: Media Relations, Sandra Hernandez, 212.761.2446