MORENO VALLEY, CA-Griffin Partners of Beverly Hills plans to reposition a 330-unit apartment complex that the company has acquired with $42.4 million in financing arranged by investment banking firm George Smith Partners Inc. of Century City. Steve Bram, a principal of George Smith Partners who arranged the financing, calls it a "highly structured financing package" for the acquisition of the El Dorado Pointe Apartments at 12159 Calle Sombra.
Bram says that the "aggressive repositioning strategy" is designed to increase net operating income and capture the continued market growth in the Inland Empire region. While such a strategy and the anticipated three-year holding period would have typically utilized a Libor-based bridge loan, George Smith Partners secured fixed-rate conduit financing, substantially lowering rates with a five-year fixed-rate interest only loan which also has a flexible payment option, Bram explains.
The five-year non-recourse loan includes permanent and mezzanine portions, taking the loan to 80% loan-to-cost, and is priced at of five-year T bills plus 150 basis points. The loan, which is open to prepayment without fee during years four and five, was underwritten at a debt coverage ratio of 1.05 on an interest-only basis. GSP arranged an equity investor to take the financing package to 96% of total cost.
Griffin Partners acquired the El Dorado Pointe, which was built in 1986, from Desert Pointe Properties Redwood City. The complex, which is composed of three two-story buildings plus a clubhouse and a leasing office, features two swimming pools, two spas, a fitness center, four laundry facilities and two lighted tennis courts.
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