RIVERSIDE, CA-Marcus & Millichap Capital Corp. has arranged $7.12 million in refinancing for Tuscan Townhomes, a 63-unit apartment complex in Riverside. Michael Derk, vice president of capital markets in the Long Beach office of MMCC, arranged the loan.
“This deal was a challenge because we had to secure a sizable loan in a tertiary market with several hurdles,” explained Derk. “First, our client wanted full leverage of 75% in a challenged market. And since this asset is fairly new, this difficulty was compounded by the asset’s limited operating history. Second, the building had recently achieved full occupancy while undergoing a management change resulting in books and records that were both limited and inconsistent.”
Terms of the refinancing include a 4.7% interest rate fixed for a term of seven years and an LTV of 75%. The loan amortizes over 30 years.
“These types of challenges are usually overcome by the strength of our borrower’s management experience,” Derk explains. “While our borrower was financially very strong, he did not have the level of multifamily experience typically required for this type of transaction. The fact that he was an absentee owner added to the challenge.”
According to Derk, “We overcame these obstacles by emphasizing the positives of the deal, which were clearly the asset quality and financial strength of the borrower.” He adds that “We also leveraged off of MMCC’s strong correspondent relationships. After identifying the correct source we were able to structure the debt and secure a below-market interest rate on a non-recourse basis, a critical component to the borrower.”
GlobeSt.com was not able to obtain further information by deadline.
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