NORTH HOLLYWOOD, CA-A joint venture of Beverly Hills-based Kennedy Wilson Multifamily has acquired the REO 180-unit NoHo 14 Tower at 5445 Lankershim Blvd., financing it via a $40 million mortgage with terms that would not have been possible six months ago, according to the CBRE Capital Markets team that arranged the financing, the mortgage broker says. Senior vice president Brian Eisendrath of the Beverly Hills office of CBRE Capital Markets tells GlobeSt.com that the break-even debt coverage ratio would not have been possible just six months ago.

"The debt-coverage ratio was really the key," Eisendrath says. "The standard has been more like 1.25. In addition, he says, lenders probably would not have agreed to the two-year interest-free period of the five-year, 5% loan or the 68% leverage.

"We achieved much higher proceeds than we as the mortgage broker or our client anticipated," Eisendrath says. Eisendrath describes the mortgage as bridge loan financing with stabilized loan terms. "We essentially got stabilized loan terms for a bridge loan," he says. The loan includes prepayment flexibility in the later years, with some penalties.

The loan was also unusual in that the lender, one of a number of life companies that competed for the deal, won in competition against Fannie Mae and Freddie Mac. "It was more so the unstabilized nature of the asset that allowed the life companies to get more aggressive," Eisendrath explains. For example, Freddie and Fannie both wanted a debt coverage of 1.25.

Eisendrath was part of a CBRE Capital Markets team including Troy Tegeler, Brian Halpern and Justin Arquilla who sourced the debt through one of its correspondent life company relationships. He says that everyone involved in the deal was surprised with the level of proceeds.

The Kennedy Wilson Multifamily JV acquired the property from Bank of America for approximately $59 million. The other partners in the JV are Guardian Life Insurance Co., Real Estate Capital Partners and Urban Partners LLC.

NoHo 14 is a 14-story tower that was built in 2008 as condominiums, but it is operating as apartments and is about 87% occupied. The project includes 11,000 square feet of retail space, which was empty at the time of closing.

According to Eisendrath, the property offers upside to the buyers on three fronts: filling the vacant units, burning off concessions that the previous owners granted to renters and leasing the retail.