(RealShare Orange County convenes at the Hyatt Regency, Irvine Thursday, August 16. Also, save the date: RealShare Apartments comes to the Westin Bonaventure, Los Angeles, October 24.)
ORANGE COUNTY, CA-Beech Street Capital LLC provided $28 million in Freddie Mac loans to refinance a portfolio of three apartment complexes in Orange County, CA. The 238-unit portfolio consists of Rancho Yorba Apartments in Tustin, Santa Clara Apartments in Santa Ana, and Villa Pointe Apartments in Orange.
The sponsor, local real estate investor Patrick Cadigan, aimed to avoid an uptick in interest rates while minimizing prepayment penalties on existing loans, according to Beech Street. Cadigan is an investor who owns 10 apartment projects in Orange County totaling 1,610 units. He is exclusively represented by Carl Greenwood and Jim McKenzie, general partners of Tustin-based Greenwood & McKenzie, a full-service real estate investment firm.
Beech Street senior vice presidents Kristen Croxton and Greg Reed structured the loans under Freddie Mac’s 120-day early rate lock program. According to the firm, its “close working relationship” with the Freddie Mac team allowed them to take this portfolio from application to rate lock in seven business days.
This transaction highlights the value-add enhancements that Freddie Mac made to its early rate lock process in December 2011. “The agency simplified the preliminary underwriting package and committed to notifying borrowers within two business days if anything is missing,” says Croxton. “They are very responsive. “
The transaction also underscores the benefits of established relationships, according to Beech Street. In November 2011, the firm secured a $30-million loan from Freddie Mac to refinance another of Cadigan’s properties, as GlobeSt.com reported. “When all the parties have worked successfully together before, you’re bound to save time,” Croxton points out. “We started with a detailed understanding of the client’s ownership, management style, and local portfolio, which helped us provide quick turnaround while maximizing leverage and cash out.”
According to the firm, another factor that produced a speedy decision was the borrower’s experience in the markets. “Cadigan is a long-term investor who has owned these properties for more than a decade, and in the case of the Santa Clara Apartments for 37 years,” says Reed. ”His approach is reflected in the care with which they have been managed and maintained by Greenwood & McKenzie.”
The three apartment complexes are also positioned in attractive submarkets, the firm says. Two of the properties had a 100% occupancy rate at the time of application while the third had a 97% rate. “This portfolio is a great piece of business for both Beech Street Capital and Freddie Mac,” Reed adds.
The fixed-rate loans have a 10-year term with 9.75 years of defeasance and amortization of 30 years payable on an actual/360 basis with a four-year interest-only period.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
