Piping Rock Partners, a San Francisco-based multifamily real estate investment management firm, has refinanced a privately placed, fixed-rate interim-term loan into a $4.35 million Federal Housing Administration 223(f) loan. The loan is secured by a 120-unit multifamily property in southern Indiana.
The interest rate on the new loan is 3.75%, which Piping Rock said is more than 100 basis points below the weighted average cost of the old loan. The loan-to-value ratio is approximately 80%. It is fully amortizing and has a 35-year term.
“We are renovating the entire property from top to bottom, including all new roofing, siding, signage and landscaping to new appliances, cabinetry and trim,” said Chris Germain, president of Piping Rock. “Now, we are able to marry the rent growth from those improvements with much lower debt service expense and significantly reduced risk. It's a huge success.”
Other recent commercial financing activity includes General Growth Properties refinancing the Staten Island Mall. The new $273 million, 4.77% 12-year fixed-rate mortgage replaces a $273 million loan with a 6.06% interest rate that was due to mature in October 2015.
This new loan removes $125 million of corporate recourse that was associated with the original loan.
GGP also refinanced its Boise Towne Square property. It was able to get a $140 million, 4.79%, 12-year fixed-rate loan to replace a $65 million, 6.64% loan due to mature in August 2014.
Both loans have 30-year amortization schedules. So far this year, GGP has refinanced 15 loans totaling $2.9 billion. These refis have resulted in proceeds in excess of in-place financing of $630 million.
A strong multifamily rental market in Northern New Jersey is benefiting borrowers and property acquirers, declared executives at the Livingston, N.J., real estate company Gebroe-Hammer Associates.
In a recent 22-day period, the company arranged some 10 transactions with a total sales price of $27.66 million.
Joseph Brecher, executive vice president, explained, “Northern New Jersey's strong tenant population and mass transit network, which allows people to move easily, whether it be for work or leisure, are the foundation for overall occupancy rates that exceed the national average. These two factors translate into stable, predictable investment returns over the long term.”
This level of predictability also has resulted in steady capital flow from lenders to finance multifamily acquisitions at Eisenhower-era interest rates, particularly those involving existing Class B and Class C properties, Gebroe-Hammer said.
“Despite the renaissance of New Jersey's Gold Coast, where there is a high concentration of new Class A product, the focus of the multifamily investment market is on the post-war-era buildings owned for decades by families,” added David Oropeza, executive vice president. “Today's investors recognize the rent potential associated with repositioning these properties, through renovation programs targeting common areas, kitchens and baths, to realize even greater income gains.”
Mercantile Capital Corp., an Altamonte Springs, Fla.-based commercial mortgage banker that specializes in the Small Business Administration 504 program, had the highest month in company history in terms of loans closed, said its chief executive, Chris Hurn.
It closed nine commercial loans in August to finance projects valued at more than $21.6 million in Florida, Texas, California, Georgia and Maryland. Mercantile's previous best month was June 2010, when the company closed nine loans worth $20.5 million.
