ALLENTOWN, PA-Fountain Development Associates, a New York City-based affiliate of Sirius LLC, has obtained an $8-million loan on the Regency Towers apartments at 1600 Lehigh Parkway East. A portion of the refinancing will replace an existing mortgage at an improved rate, and the rest is being used to upgrade the property.

"We needed a complex financing package that would provide forward funding to avoid an onerous prepayment penalty," says Jesse Krasnow, a Fountain principal. "We also wanted the flexibility to earn out additional proceeds."

Mark Cohen, senior director in CBRE Melody's New York office, arranged the funding from Citibank. He notes that it's at a fixed rate for a 10-year term on a 30-year amortization schedule. "The 5.65% rate is locked in now, but the funds will be held until the borrower's existing loan expires in three months. The loan allows the borrower to earn out additional funding, tied to an increase in cash flow and based on the performance of the property."

The 11-story, 176-unit building is located on 3.3 acres. It was completed in 1972 and is 93% leased. Ground-level commercial space is leased to medical and legal professionals. Published rent rates for the residential units range from $630 a month for a one bedroom to $1,900 a month for a three-bedroom unit.