Calera Buys 184 Units for Repositioning

Calera has contracted with Pacific West Management Co. to implement a repositioning program to drive revenues to current market levels. According to Jerry Binkley, president of Calera, the purchase was "one of the most challenging acquisitions we have ever made due to the volatility in the debt markets." He adds that the company continues to be "aggressive acquirers in our pursuit of California value-add product." The Brookstone property represents Calera's fourth acquisition in the past five months.

Marcus & Millichap Capital Corp. arranged a $23.4 million fixed-rate loan for the acquisition. The financing was arranged by Jake Roberts and Anita Paryani, senior directors in the West Los Angeles office of MMCC.

Roberts says that the financing provides more than $12,000 per unit in capital reserves for repairs and upgrades. "We convinced the lender that the borrower would be able to achieve post-rehab rents based on the surrounding market and improvements planned for the property," he says.

Mesa West Capital provided the $23.4 million in financing. Whitney Asher, vice president at Mesa West, comments that, "Given the property's location within a strong infill market, we believeit will remain active and continue to demonstrate upside potential."The renovation and repositioning of the complex "will boost the property's appeal and attract a higher quality tenant, allowing Calera Investment Group to increase rental rates," Asher adds.

The financing is at a 5.85% fixed rate for the first two years, then Libor plus 300 basis points for the remainder of the term. The terms of the loan are three years interest-only with a loan-to-value ratio of 67%.

Roberts says that MMCC secured a loan commitment in less than a week when the initial lender's loan fell through. The financial package also provided for a two-year fixed-rate loan, with the lender's debt funded day one and the borrower's equity funded over time, " thus causing a significant increase in the borrower's internal rate of return," Roberts points out.

Calera Investment is a private, multifamily investment company that is seeking value- add apartment properties throughout Northern and Southern California. Founded in 2007 by Jerry Binkley and Chaille James, the firm maintains regional offices in Santa Clara and Glendale, CA.