$21M Finances Apartments

In the local transaction, a California limited partnership secured $15 million in refinancing from PW Funding Inc. for Indian Creek Apartments, a 254-unit complex that was built in 1986 and consists of one- and two-bedroom apartments in 26 two-story, garden-style buildings.

PW funded the loan under Fannie Mae's DUS program at a 5.65% interest rate, a debt service coverage of 1.3, and a loan-to-value of 80%. The deal was originated by Richard Olrich, Krage Olrich, and Matthew Olrich of PW Funding.

In the Moreno Valley financing, Related provided $6.2 million in equity to an affiliate of Palm Desert Development Co. in exchange for tax credits generated by the new development, a 61-unit property called Cottonwood Place II.

The $9.3-million project is the second of a three-phase affordable housing complex. The first phase, 108-unit Cottonwood Place I, was also financed by Related Capital and has been 100% occupied since it opened in 1998.

PW and Related say the see the region as one of the healthiest apartment markets in the nation, fueled by job creation, population growth and an overheated housing market that spurs on apartment rentals. The funding sources note that the region's average price per multifamily unit rising a hefty 22% in the first three quarters of this year with an additional 8% increase anticipated in 2004, according to research just out from Marcus & Millichap.

Many would-be homeowners are priced out of the Inland Empire housing market, and even more renters are hard pressed to find affordable apartment options, notes Ronne Thielen, EVP and West Coast regional director of Related Capital Co., adding that almost half of the Moreno Valley population is income-qualified for affordable housing, but until recently has had virtually no affordable housing alternatives.

The Cottonwood Place II development will be composed of five, two-story apartment buildings and a community building. The family-size, three-bedroom apartments will be 1,075 sf and available to residents earning 60% or less of the area median income. Rents are expected to start at approximately $294 per month, compared with market rates that start at about $900 per month.