MIAMI-Marcus & Millichap Capital Corporation’s MichaelBalan, a senior director in the firm’s Miami office, has recentlyarranged for $10.41 million in refinancing for an approximately10-year-old, 120-unit, multifamily high-rise development in theCoral Way corridor west of Brickell Avenue. He did not disclose theborrower or the lender.

|

“It was a great deal for everyone,” says Balan. “The loan wasdue in August or September, treasuries were dropping, so there isan historically low fixed rate, and the loan has a conservativeloan-to-value,” he says.

|

The Coral Way corridor is residential with some othermultifamily buildings, although there are more condominiums thanapartments in the area, says Balan. The loan is aten-year-fixed-rate loan with a 65% loan-to- value. The interestrate is 5.39% and the amortization is 30 years. “There are not alot of sales in the market today, so we could have easily ended upwith a lower value,” he says.

|

The average rent at the Coral Way apartment development isbetween $1200 and $1300 per month for a one or two bedroomapartment, but two-thirds of the units are two-bedroom apartments,says Balan. Although there are some condominiums in theneighborhood, the development is not competing with the shadowmarket, Balan believes.

|

“The borrower is an experienced investor with a goodrelationship with his (regular) lender, a national bank,” saysBalan. But finding a loan with proceeds high enough torefinance a maturing loan can be difficult in today’s environment,he says.

|

“We try to avoid having REOs as comps,” says Balan. Although theappraiser has to include REOs, without the help of realestate agents who know of properties which are about to close orhave recently closed, ”you roll the dice and end up with compswhich are all REOs that won’t support the value of theproperty,” says Balan.

|

“Ours is a fully-occupied, operating building in perfectcondition with no deferred maintenance, and it is in a desirablelocation,” says Balan, referring to the Coral Way apartment. “Lotsof distressed assets are in inferior locations and are of inferiorquality,” he says. He doesn’t want his borrower’s property to becompared with others not of the same quality, says Balan.

|

If an appraiser is doing an appraisal of a building, he inspectsa percentage of the units or the whole property, and knows whatdeferred maintenance is needed, says Balan, but he doesn’t havesuch detailed information for comps, so it is harder to compare thetwo properties, he says.

|

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.