M&M Arranges $10M in Refinancing for Apt.

By Hortense Leon

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Balan

MIAMI-Marcus & Millichap Capital Corporation’s Michael Balan, a senior director in the firm’s Miami office, has recently arranged for $10.41 million in refinancing for an approximately 10-year-old, 120-unit, multifamily high-rise development in the Coral Way corridor west of Brickell Avenue. He did not disclose the borrower or the lender.

“It was a great deal for everyone,” says Balan. “The loan was due in August or September, treasuries were dropping, so there is an historically low fixed rate, and the loan has a conservative loan-to-value,” he says. 

The Coral Way corridor is residential with some other multifamily buildings, although there are more condominiums than apartments in the area, says Balan. The loan is a ten-year-fixed-rate loan with a 65% loan-to- value. The interest rate is 5.39% and the amortization is 30 years. “There are not a lot of sales in the market today, so we could have easily ended up with a lower value,” he says.

The average rent at the Coral Way apartment development  is between $1200 and $1300 per month for a one or two bedroom apartment, but two-thirds of the units are two-bedroom apartments, says Balan. Although there are some condominiums in the neighborhood, the development is not competing with the shadow market, Balan believes.

“The borrower is an experienced investor with a good relationship with his (regular) lender, a national bank,” says Balan.  But finding a loan with proceeds high enough to refinance a maturing loan can be difficult in today’s environment, he says.

“We try to avoid having REOs as comps,” says Balan. Although the appraiser has to include  REOs, without the help of  real estate agents who know of properties which are about to close or have recently closed, ”you roll the dice and end up with comps which are all REOs that won’t support  the value of the property,” says Balan.

“Ours is a fully-occupied, operating building in perfect condition with no deferred maintenance, and it is in a desirable location,” says Balan, referring to the Coral Way apartment. “Lots of distressed assets are in inferior locations and are of inferior quality,” he says. He doesn’t want his borrower’s property to be compared with others not of the same quality, says Balan.

If an appraiser is doing an appraisal of a building, he inspects a percentage of the units or the whole property, and knows what deferred maintenance is needed, says Balan, but he doesn’t have such detailed information for comps, so it is harder to compare the two properties, he says.

Categories: Southeast, Multifamily, Capital Markets, Miami