HOUSTON-A multifamily property owner has secured $12.06 million to finish a renovation of the 369-unit Rolido Parque Apartments in Westchase. The fresh capital, bearing an 80% loan-to-value ratio, replaces a floating-rate vehicle with a fixed rate for the three-year term.
The Horsham, PA-based Capmark Finance Inc. replaced Wachovia as the lender with the refinance by Chancellor Real Estate, the local operating partner, and its equity backer, Overland Capital Corp. of Boston, according to Brant Smith, vice president in Houston for Capmark Finance. The owner of record, Rolido Parque LP, plans to invest another $2,000 per unit into finishing work at the 2929 Dunvale Rd. asset, Smith tells GlobeSt.com. The owner had completed interior upgrades in 2004 so the majority of the reserve pool, which will be released in staged advances, will be applied to refurbishing the 20-year-old complex's exterior and grounds. The 9.35-acre asset consists of 13 two- and three-story buildings, clubhouse and leasing office.
Rolido Parque has hit 87% physical occupancy in its mix of one-, two- and three-bedroom units, averaging 713 sf. Smith says the economic occupancy, though, is hovering 75%. "The play is to get the economic occupancy back up the low 90%," he says. "It's a concessions play as much as a rent growth play." The complex's average rent is $615 per month.
Concessions historically have been one month of free rent for a 12-month lease in the Westchase submarket. Smith says the new class A product has been absorbed so the door is open for class B complexes like Rolido Parque to gain some traction. "The market is tightening. It was pretty easy to foresee the upside in the rents on this project," he adds.
Smith says Capmark set up a highly structured, short-term loan, starting with a floating rate of 180 basis points over Libor and changing at the very end of the dealmaking. "We've allowed them, with a hedging mechanism, to swing that floating rate to a fixed rate," he explains. The prepayment penalty declines over the term's loan.
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