Refi in 4% Range Cuts Interest Costs

GARDEN GROVE, CA-The owner of a 239-unit apartment complex in this Orange County city has supplanted higher-rate bond financing with a new $20 million, 10-year loan in the 4% interest range, according to Holliday Fenoglio Fowler, which arranged the refinancing. HFF managing director David Bleiweiss reports that Bertram Partners Inc.’s new 10-year loan is a fixed-rate Fannie Mae DUS financing. The new loan replaced higher-rate bond financing that was previously encumbering the property.

“This allowed the borrower to significantly reduce his interest costs to today’s rates in the four-percent range,” Bleiweiss said. The property that was refinanced is Rose Garden Apartments, located at 9645 Westminster Ave. and 11632 Stuart Dr., close to the Garden Grove Freeway, Interstate 5, Huntington Beach and Santa Ana. The property is an affordable housing complex and maintains, on average, 97% occupancy.

Irvine, CA-based Bertram Partners Inc. is the owner and managing general partner of approximately 2,000 conventional and affordable apartment communities in both Southern California and Arizona. Bleiweiss notes that Bertram is actively seeking to acquire additional properties in both locations.

The new debt on the property is one of a number of notable refinancings of multifamily properties by Southern Califoria-based owners lately, according to recent reports on GlobeSt.com. For example, a joint venture of Beverly Hills-based Kennedy Wilson and New York City's LeFrak Organization refinanced a three-property multifamily portfolio valued at $100 million with a $71.2 million loan at a 4.39% interest rate.

The new debt for the three multifamily properties is a 10-year loan at fixed-rate financing that represents a rate reduction that "will allow the venture to materially lower the leverage on the portfolio, reducing interest expense by $1.5 million a year and thereby increasing income and cash flow,” commented Robert Hart, president and CEO of Kennedy Wilson Multifamily Management Group.