Dwight Mortgage Trust Launches New Construction Lending Platform

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Dwight Mortgage Trust, the real estate investment trust affiliate of Dwight Capital, has launched a new balance sheet construction lending program for multifamily and mixed-use properties, Commercial Observer can first report.

The loan program will finance ground-up development of garden-style and mid-rise properties, projects undergoing substantial rehabilitation as well as conversion of existing properties. 

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Adam Sasouness, managing principal at Dwight Capital and Ian Hawk, associate, noted that they saw a market opportunity in the $15 million to $60 million loan range where there are limited lenders for construction loans.

“Given today’s uncertain supply chain, labor disruptions and increased demand for new multifamily housing, Dwight is well-positioned to provide loans in that range and above while understanding our borrowers’ specific needs and providing them with solutions from land acquisition through stabilization,” Sasouness said. “We are able to serve as a trusted partner who understands the challenges and opportunities of developing in today’s unpredictable market.”

Sasouness said the lending platform, which has been in the works since the second quarter of 2021, will utilize Dwight’s existing resources to underwrite construction debt for borrowers under the revamped U.S. Department of Housing and Urban Development (HUD) 223(f) program. HUD recently removed a three-year rule that excluded 223(f) financing for three years following certificate of occupancy for projects built with conventional construction loans. 

“This has created opportunities to work with borrowers on building to HUD specifications with conventional construction loans, which gives us flexibility in project locations and leverage for high-quality sponsors and development teams,” Sasouness said. 

The most recent balance sheet construction loan Dwight closed under the new program involved a $20.1 million financing for Nottinghill Living, a planned 132-unit garden-style apartment complex by The Flacks Group in Davenport, Fla. The project, which is estimated for completion in 2023,  will consist of four, three-story buildings with amenities including barbeque grilling area, dog park, fitness center, playground, swimming pool, pond and walking path. 

Sasouness originated the transaction and Jeff Seidenfeld of Sevenstone Capital arranged the financing.

Dwight is targeting assets in mainly top 100 metropolitan statistical areas with positive long-term demographic trends. The Manhattan-based lender is projecting roughly $500 million of origination volume in 2022. It expects the 223(f) refinance will be an attractive option for borrowers in a rising interest environment since it offers comparatively high leverage coupled with a lengthy 35-year term and a flexible step-down prepayment schedule.

“The future growth of our program is dependent on market conditions and activity,” Sasouness said. “We hope to leverage our exceptional ability to underwrite transactions as we work to cultivate clearly defined exit strategies for this new type of loan service.” 

Andrew Coen can be reached at acoen@commercialobserver.com