$190M Finances Apartment Portfolios

Michael T. Elmore, SVP and senior director with NorthMarq in Newport Beach, says the $100-million line of credit was provided through Freddie Mac and is secured by a portfolio of four properties. The name of the borrower was not disclosed, but records indicate the properties are owned by apartment REIT Essex, based in Palo Alto.

Elmore, who arranged both of the financings, says the other transaction, a $90-million loan, sets the stage for additional acquisitions by Advanced Real Estate Service Inc. of Lake Forest.

Richard Julian, president of Advanced, tells GlobeSt.com that his 25-year-old company is looking to invest the proceeds of the refinancing into apartment complexes in Los Angeles, Orange, San Diego, Riverside and San Bernardino counties. Julian explains that Advanced, which owns about 4,000 units in Southern California, typically buys properties of 100 units and larger, and its holdings include one complex of 680 units. But the company also considers complexes in the 50-unit range if they are close to one of its existing properties. Advanced typically is a long-term buy-and-hold investor, even when it acquires value-added properties that require extensive renovations, Julian tells GlobeSt.com. However, the company does sell assets occasionally, like the 261-unit complex it sold last year. Advanced also manages its own holdings.

According to Julian and Elmore, the $90-million refinancing consisted of seven separate 10-year loans, all of them locked in at interest rates of 5.5% to 5.75%. The first two years are interest-only on all of the loans, which amortize over 30 years, beginning in the third year. The portfolio consists of 1,116 apartment units and includes 974,149 rentable sf on more than 60 total acres. The complexes include one- and two-story buildings, each with floor plans ranging from studio to four-bedroom designs. Included are the 100-unit Fair Oaks Apartments in La Habra; the 104-unit Four Seasons Apartments in Paramount; 74-unit Lantern Bay Apartments in Orange; 116-unit The Pines at Montclair in Montclair; 562-unit Villa del Sol Apartments in Santa Ana; the 40-unit Evergreens Apartments in Orange; and the 120-unit Yorba Linda Pines in Yorba Linda.

In the other transaction, the $100-million credit line is secured by a four-property portfolio of 738 apartment units comprising 740,215 rentable sf. The California complexes include the 120-unit Bonita Cedars in Bonita, CA; the 270-unit Essex at Lake Merritt in Oakland; and the 132-unit Trabuco Villas in Lake Forest. The Washington property is the 216-unit Castle Creek complex in Newcastle.