ATLANTA-Small metro class C multifamily projects, needing capital for new and existing properties, have received a total $30.3 million in loans from two separate lenders.

Locally based Sovereign Capital arranged a $10-million loan for MSB Apartments LLC to complete the $10.5-million acquisition of the distressed 306-unit Morningside Apartments at 3480 Morningside Village, Doraville. The loan-to-value factor was over 95.22%.

Fannie Mae foreclosed on Morningside in 2005. At that time, the property was operating at less than 82% and four months prior to the foreclosure was only at 60%, says Chris B. Johnston, managing director of Sovereign's Atlanta office. "Limited equity resources of this entrepreneurial, locally based borrower was clearly a challenge," Johnston says. However, Sovereign crafted a financial plan in only 24 days that helped the borrower take advantage of "this value added opportunity," the mortgage banker says.

In its second transaction, Sovereign arranged $8.3 million in debt capital on Sun Valley Apartments, a 322-unit apartment building at 1438 Bouldercred Rd. SE owned by Sun Valley Apartment Partners Inc. "The borrower was aggressively seeking new financing due to a senior loan that matured and was on its last extension arrangement with the lender," Johnston says.

The mortgage banker says the client had approached other lenders, all "providing less than attractive terms and requiring cash to the note provision in excess of $1.25 million to satisfy the current debt amount." Sun Valley Apartments had "a tough year of physical and economical occupancy, and at the time of underwriting was only 84% occupied," Johnston says.

The client was "looking for a permanent financing solution and we delivered on replacing the debt, dollar for dollar," he says. The transaction took only 45 days to complete.

In a refinancing of the 398-unit Forest Cove Apartments at 900 New Town Circle SE, Arbor Commercial Funding LLC of Uniondale, NY provided a $12-million loan under Fannie Mae's DUS Multifamily Affordable Housing product line. The 10-year loan amortizes on a 30-year schedule and carries an interest rate of 5.75%.

Peter Blass, director of Arbor's full-service New York lending office, originated the loan and had it underwritten in Arbor's Atlanta office. Blass calls Forest Cove Apartments "the largest affordable housing project in Atlanta." He says the borrower completed "an entire rehab of the property that included nearly $3 million in capital improvements."