FOUNTAIN VALLEY, CA—Seth Grossman, managing director of Meridian Capital Group LLC, and Capital One Multifamily Finance‘s SVPs Greg Reed and Kristen Croxton have arranged a $64-million refinancing of Palm Island, an age-restricted apartment community at 11300 Warner Ave. here, on behalf of an Orange County-based sponsor. The 10-year loan, provided by a CMBS lender, features a competitive fixed rate of 4.47% and interest-only payments for the full term.
The 456-unit Palm Island property is leased to seniors 55 years of age and over and has amenities catering to an active lifestyle, including a 24-hour surveillance system, community center, library, card room, billiard room, fitness center, computer room and heated pool and spa as well as numerous planned social activities.
The transaction was a cash-out refinance of a first and second mortgage by a new first mortgage with a lower rate. The refinancing was originally structured in 2013 as a 10-year mortgage with five years of interest-only payments. Due to volatility in interest rates during the summer of 2013, the borrower decided to put the transaction on hold until the bond markets stabilized. All sides waited on standby for more than a year as the market rebounded and the loan terms became even more attractive. The transaction closed very quickly with significantly better terms then the original structure—namely, additional interest-only and a lower interest rate.
The Capital One team has a long-standing relationship with the sponsor and knew the interest-only feature available in the CMBS market would be accretive to its business plan. Reed and Croxton consulted Grossman to tap into his expertise with non-agency lending. “The two platforms’ complementary skill sets have been a tremendous benefit for everyone involved,” says Grossman. “The Capital One Multifamily team clearly put the client’s needs first, as evidenced by their perseverance over the course of the year to close in a short timeframe once rates were most competitive.”
Meridian is no stranger to arranging large multifamily loans. As GlobeSt.com reported last month, the firm arranged $66 million for St. Moritz Apartments in Edgewater, NJ, for a deal purchased by a fund managed by Cornerstone Real Estate Advisers. The asset was sold by Fred Daibes, who built the 224-unit development in 2005. NYS Teachers’ Retirement Systems provided the seven-year loan.