on three multifamily properties
including Peppermill (pictured).
SAN ANTONIO-Five years after acquiring a 942-unit multifamily property portfolio and accompanying assumable mortgage, owner Partnered Property Acquisitions Group LLC obtained a $39.2 million loan to refinance the collection. Beech Street Capital LLC helped out, working with Freddie Mac to execute three 10-year, fixed-rate loans on the 466-unit Sunset Canyon Apartments; the 244-unit Kenton Apartments and the 232-unit Peppermill.
According to Beech Street vice president Brian Sykes, the liaison between Freddie Mac and the borrower, obtaining the loans was a challenge, not the least of which was maturity timing, foundation issues and working with different equity partners. The loan was used to pay off an existing blanket for the first mortgage; PPA also wanted the proceeds to cover the mezzanine debt and close the loan without funds coming out of pocket.
“We took advantage of the uptick in valuations in the San Antonio market and worked closely with the appraisal district,” Sykes adds. “We ended up with $1 million more in proceeds than when we’d originally signed on, which made this a cash-neutral transaction.” Furthermore, Beech Street helped PPA rate lock 30 basis points lower than initially anticipated.
PPA bought the three assets in 2008 for $40.5 million from Metra United and planned an additional $1.2 million in upgrades. At the time, PPA took on an assumable mortgage with a 2012 maturity date for the portfolio. Sunset Canyon at 2170 Thousand Oaks Dr., Kenton Apartments at 14650 Nacogdoches Rd. and 232-unit Peppermill at 2125 Universal City Blvd. in Universal City, TX had a combined occupancy of 92% at the time of their sale.
Sykes tells GlobeSt.com that the owner has done a good job sprucing up and managing the properties; currently occupancy portfolio-wide is 95%. “The properties continue to do very well, and continued to improve during the underwriting period,” Sykes adds.