The apartment complex has 40 three- and four-bedroom units.

NORTHRIDGE, CA—Index Investors have secured a refinancing loan for a rare townhome-style apartment complex. The loan, arranged by Johnson’s Capital, has a low interest rate around 4%.

Sean Barry and Josh Kashani of Johnson’s Capital’s Los Angeles office arranged the financing on behalf of Index Investors, which borrowed $7 million or $175,000 per units. According to Barry, the price per unit for the market is very high and presented a challenge in securing the funding, which was exacerbated by limited market comparables due to the rarity of the asset—a 40-unit apartment complex comprised of mainly three- and four-bedroom units.  

The refinancing loan has five-year term and a loan-to-value ratio of 70%. Although Barry and Kashani were able to secure a low interest rate, the first three years of the loan will be interest-only payment with no prepayment penalty after the first year. After the first three years, the payment schedule will convert to a 27-year amortization. A regional bank funded the loan.

Index Investors’ investment strategy involves purchasing, repositioning and selling assets. For this asset, it has significantly renovated half of the units, installing new windows, high-end appliances, hardwood floors and new finishes. Additionally, it has added new landscaping, secured entry and an upgraded façade to the building exterior. The investor will use the proceeds of the loan to payoff existing financing and recoup equity already invested into the project. reported a few weeks ago that the owner of a nearby property also secured a refinancing loan. The private investor secured $32 million to refinance an existing CMBS loan it had for Park Parthenia Apartments, a 447-unit apartment complex. The loan also had a 4% interest rate.