DALLAS-A California-based private REIT has bed down a $350-million refinance of 19 class A multifamily properties in Dallas/Fort Worth, San Antonio and Phoenix. The borrower has put a gag order on its identity because it's pulling equity to acquire more assets, with the thrust of the action to keep the size of the buying pool under wraps and Texas tax men at bay.
The refinance has been done in three pools with five-, seven- and 10-year terms, says Larry Sneathern, senior vice president of the Central region for the Calabasas Hills, CA-headquartered ARCS Commercial Mortgage. He says the assets are cross-collateralized within the pools, all funded by Milwaukee-based Northwestern Mutual Life Insurance Co. The regional executive was as forthcoming as possible about the refinancing information.
Sneathern says several lenders, including Fannie Mae, were jockeying for the deal, which spun to a commitment and rate lock 16 days after application. Forty-five days later, final papers were signed.
"Timing was everything," Sneathern says. "Northwestern Mutual's rates and execution were second to none." Even the rate lock is off limits as a discussion point at the buyer's insistence. "Everyone worries about the taxing authority," he stresses. "This just makes it a little more difficult." What he can say is the fast-paced closing for the Texas-size deal is a credit to the borrower's blue-blood credit and the assets' qualities. He also can acknowledge the REIT's refinancing strategy is aimed at pulling equity for additional acquisitions and ridding itself of floating-rate debt.
Sneathern tells GlobeSt.com that the 94%-leased portfolio, assembled in the past five years, consists of six complexes, totaling 2,708 units, in Dallas; 11 assets, totaling 2,631 units, in San Antonio, including three new deeds; and two properties with 596 apartments in Phoenix. A couple complexes were built in 1991, but the vast majority rose between 1999 and 2005.
The financing is the largest to date this year in ARCS' local office. Sneathern says he wasn't privvy to information about the retired lender or details about the origin of the floating-rate debt. "I was acting more like a mortgage broker," he adds.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.