KeyBank Provides $27M Refi For Multifamily Assets
(Save the date: RealShare Apartments comes to the Westin Bonaventure, Los Angeles, October 24.)
COLORADO SPRINGS, CO-KeyBank Real Estate Capital has shown continued faith in the multifamily market with its provision of two 10-year, fixed-rate loans used to refinance existing mortgages on multifamily properties. The loans, acquired through Freddie Mac, will amortize on a 30-year schedule and total $27.35 million.The financial-services company closed on an $8-million loan for sponsor Puma Investments LLC to refinance Conifers at Spring Creek, a 280-unit garden-style apartment complex here. Additionally, the firm closed a $19.35-million loan for borrower Grand Peaks Properties to refinance Grand View at Flatirons, a 180-unit, class-A apartment complex in Louisville, CO.
The loans were originated by VP Charles Williams and western regional manager Jon Reible from KeyBank’s multifamily production team. KeyBank is a Freddie Mac seller/servicer with extensive experience in the multifamily industry throughout Colorado.
“The multifamily market in Colorado is as strong as it has ever been,” Williams tells GlobeSt.com. “We have had 10 straight quarters of rental increases, and current projections are for rent growth near 5% annually for the next five years. Vacancy is below 5% on properties of 50 units or greater as well. We continue to see institutional and individual investors flocking to the market as new development is lagging the current demand, and we expect this trend to continue over the next two to three years.”
Williams adds that the highest demand is in the employment centers: Downtown Denver, the 36 Corridor to Boulder and the I-25 Corridor south through the Denver Tech Center. “These areas are not only seeing the highest rents per square foot, but new developments are starting to come online. These new projects are not hampering the absorption, as Denver is still an ‘in-demand’ location for recent college graduates.” He says that these sub-markets are wise for long term investors since job growth and demographics point to the trend of rent growth and low vacancy continuing into the foreseeable future.
Moreover, Williams continues, the availability of capital for projects in the Denver metropolitan area has significantly increased over the past two years. “The rent growth and demand for units has allowed lenders to be comfortable dipping their toes back into the new construction market. We are also seeing life companies become more aggressive on class-A properties in the area.”
However, the best deals for stabilized assets continue to be with the GSE,Williams points out. “Fannie Mae and Freddie Mac still offer the best combination of leverage, rate and term for most investors.”
Naturally, one factor leading to the firm’s latest refinancing loans is the current historically low interest rates. “Our client in Colorado Springs was able to pull cash out in order to do significant capital improvements while lowering his overall debt service on the property, thus increasing the value of his property and his cash flow,” Williams tells GlobeSt.com.
As GlobeSt.com and Real Estate Forum previously reported, KeyBank went through a period of retrenchment after the crash, reemerging as a smaller, more focused and, some would say, even more conservative lender. Yet it decided to go forward with a $50-million senior secured credit facility on the part for Sunrise Senior Living in October 2011—which the senior housing company is using for working capital and general corporate purposes—for some very practical and far-sighted reasons. It is also bringing to the table its treasury management operations and other potential business.
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