Blackstone Real Estate Partners is securitizing a new $343 million commercial mortgage that financed the parent firm’s recent acquisition of a portfolio of Southern California luxury apartments.
The deal, BX Trust 2019-CALM, is a transaction of nine senior and subordinated notes secured by a two-year, interest only commercial loan with three one-year extension options.
The loan itself is secured by a portfolio of seven multifamily properties totaling 1,664 units that Blackstone Group acquired in September from a Los Angeles-area apartment developer for $513 million. The apartments are located in Los Angeles, San Diego and Riverside.
The loan was originated and sold by Barclays and Societe Generale.
S&P Global Ratings is assigning preliminary AAA ratings to the $146.1 million Class A tranche of notes. The capital stack also includes six subordinate classes and two interest-only tranches.
The loan is considered highly leveraged with a 121.7% of LTV ratio, compared to the appraiser’s aggregate valuation of 74.9% - a difference S&P says is due to varying opinions on expected management fees, vacancy loss and capitalization rates.
S&P states the seven properties are Class B/B+ properties, including the Vicino Apartments, Metro 3610 Apartments and Harborview Apartments. The properties were built in 1971 and 1972, and since 2015 TruAmerica spent $27.1 million in renovation expenses involving the addition of new clubhouses, upgrading pool and fitness center amenities, painting exterior facades and replacing roofs.
Interior renovations in the units totaling $1.4 million are still planned.
The apartments have a reported average occupancy of 95.3% as of Oct. 16, consistent with rates in 2017 (95.6%) and 2018 (95.1%).
The weighted average monthly rent of $1,886 per unit, slightly above the submarket average of $1,782. The rents support net cash flow that totaled $25 million from the prior 12 months to Sept. 30, according to S&P.
