Doylestown Multifamily Secures $36M Refi Deal

DOYLESTOWN, PA—The Center Square Towers apartment property here has secured a $35.8-million Fannie Mae conventional multifamily loan to refinance the property.

New York City-based Hunt Real Estate Capital provided the Fannie Mae loan for the 350-unit mid-rise apartment complex.

“Center Square Towers was purchased by the borrower in 2014, and Hunt Real Estate Capital provided $25.7 million in acquisition financing to facilitate the deal,” says Bryan Cullen, managing director at Hunt Real Estate Capital. “In 2016, we provided a supplemental loan totaling approximately $4 million.”

The latest financing features a 10-year term with five years of interest-only payments followed by amortization based on a 30-year schedule. Yield maintenance will apply during the first 114 months with a 1% pre-payment thereafter with the last 90 days open. The borrower is a TIC structure related to the original 1031 exchange transaction used to purchase the property, Hunt Real Estate reports.

Cullen adds that since acquiring the property, the borrower has invested approximately $3.3 million in capital improvements and amenities at the property. Upgrades performed since acquisition include upgrades to the two main roofs, mechanical components and other building systems, and appliance and furnishing upgrades throughout the units, including kitchen and bath renovations. In addition, property amenities were improved and a large parking lot was added.

Center Square Towers is comprised of two buildings. The buildings were developed in 1975 with 206,764 square feet of rentable space situated on 12.19 acres of land. The community was renovated in 2014 and offers 172 studio units and 178 one-bedroom apartments. The property offers residents 353 open parking spaces.

The refinancing qualified for Fannie Mae Green Rewards, with planned improvements projected to result in 15.6% in energy savings and 17.1% in water savings.

“We first completed a green report to make sure the borrower qualified, and just after we completed it the treasuries rallied,” Cullen notes. “We rate locked within a day of the borrower requesting it, and the total loan process took 49 days.”

Borrower Chris Zentgraf adds, “We chose to pay a fairly large yield maintenance penalty, but it was worth it due to the low fixed rate, longer interest-only period, and the amount of proceeds from the refinance.”

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