HOUSTON-A South Florida buyer obtained a $43.1-million loan to acquire the 398-unit Villas at Bunker Hill from Falcon Southwest in Austin, TX. With help from the Freddie Mac loan, the buyer paid $56.7 million for the class A, 92.5%-occupied multifamily property.
According to James Kelly, vice president, mortgage banking with Centerline Capital Group, though the sponsor was well-regarded and the property at 9757 Pine Lake Dr. well-positioned, a couple of things stood in the way of a seamless closing. Kelly, who represented the borrower in the transaction, says the loan had an additional component of $4 million of preferred equity broken down into two classes. Freddie Mac, he says, doesn't offer a loan with those terms too often though "it was made much easier because we had a strong, experienced borrower that set up similar programs in the past, and our office has closed on preferred equity deals in the past as well," Kelly tells GlobeSt.com.
Another challenge, he went on to say, was environmental issues; the property had been cleaned several years ago with superfund money. Though everything had been remediated many years ago, Kelly says this still required a couple of extra steps and some paperwork to move through.
With the dust settled, the buyer is looking to buy more multifamily properties, and Kelly says it's a good time to get loans and to refinance already existing ones. "We're seeing more players refinancing," he observes. "We've had several taking the pre-payment penalties to tap into today's rates." Villas at Bunker Hill wasn't a refinance, but the seven-year loan came with an interest rate of 3.53%, with one year of interest-only payments.
"It's a good time to get loans," Kelly says. "Both agencies had their biggest year ever last year and the CMBS markets became more competitive last year, even with second-tier properties." But the lenders aren't exactly shoveling money out, either. "The main thing to keep in mind, in order to get top-shelf financing, is to put a decent amount of equity in the deal," Kelly advises.
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