HOUSTON-An affiliate of Fowler Property Acquisitions has borrowed $18.4 million to retire a HUD loan assumed four months ago when it acquired the 320-unit Park Lakes Apartments in the Medical Center.
Brant Smith, vice president in Capmark Financial Group Inc.'s Houston office, says the HUD loan for the 96%-leased complex at 9955 Buffalo Speedway was open to prepayment in September. "The HUD financing was a little out of the market on the rate by about a couple hundred basis points," the loan arranger adds.
The 10-year interest-only loan carries a fixed-rate interest just north of 6% from Principal Financial Group Inc. of Des Moines. Smith tells GlobeSt.com that the debt had to be sized based on interest-only rather than amortization. "Principal, for certain assets, was willing to do that," he says. "This is a great asset in a great location, but difficult to get a loan at the loan amount request. But Principal was very flexible."
The San Francisco-based Fowler's affiliate bought the class A complex from Rockwell Management Corp., which had the asset on the market at $23.3 million. David Mitchell with Apartment Realty Advisors in Houston brokered the deal. The complex, built six years ago, is assessed at $17.3 million by Harris County.
Park Lakes Apartments has one-, two- and three-bedroom units ranging from 594 sf to 1,154 sf. Monthly rents go from $680 to $1,125. Smith says the owner mostly likely will invest some capital into upgrades, but the loan was only obtained to knock out the HUD mortgage.
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