Erland L. and Mary Ann Stenberg of Santa Rosa, CA assumed a $1-million, first-lien mortgage with a 7.04% fixed-rate interest through 2013 for Park Square Apartments at 4019 Park Square Dr. in West Arlington, Thomas Burns, senior investment adviser in Dallas for Phoenix-based Hendricks & Partners, tells GlobeSt.com. "The purchaser still got in at 20%, but we did it with a promissory note that didn't encumber the property," he explains, citing the end result is a blended interest rate that eases the fixed fee from the Horsham, PA-based GMAC Mortgage Corp.
Burns says the 93%-leased Park Square was on the market seven months, attracting 15 offers. The assumption requirement and then the process slowed the dealmaking. "It's a big sales job to get someone to assume 7% debt," he says. With the deal closed, the seller of record, GPI Park Square, has sold three of four multifamily properties--all shouldering loans with rates upward of 7% interest.
Park Square Apartments' appeal is below-market rents, says Burns, who partnered with Hendricks' George Deuillet III on the sale. Units averaging 657 sf are renting for $433 per month. Burns says the seller never raised the rent so the complex had historically high occupancies, oftentimes at 100%.
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