TruAmerica Scores Unbelievable Rates

LOS ANGELES—TruAmerica Multifamily has secured a $156 million in acquisition financing to purchase a six-property multifamily portfolio in Oregon and Washington. In an earlier story, GlobeSt.com reported that TruAmerica purchased the portfolio, which also included a seventh property in Salt Lake City, for $255 million. Now, we have learned exclusively that the investor also financed a portion of the purchase, nabbing interest rates as low as 2.6%. Although we are in a low interest rate environment, these extremely low rates are indicative of TruAmerica's reputation for performance.

“TruAmerica has a lot of respect in the lending community. Given its volume, track record and reputation, TruAmerica gets very attractive debt terms,” Brian Eisendrath, vice chairman at CBRE capital markets, tells GlobeSt.com. “The goal on the financing side was to find a one-stop shop that could really handle the debt of the individual properties' specific business plans. On some of these properties, they wanted prepayment flexibility in the event that they decided to sell, and in other assets, they wanted a medium duration. It was important, too, to incorporate interest only as they wanted increase cash flow to investors.” Eisendrath secured the funds on behalf of the borrower along with his colleague Cameron Chalfant. 

For three of the properties in the portfolio, CBRE secured a seven-year fixed-rate loan with three years interest only at a blended rate of 3.8%. The remaining two properties have a floating rate interest-only loan with a 2.6% starting rate. The CBRE team was able to increase proceeds for $5 million from the time of the application to closing, which helped to further drive returns to TruAmerica's investors. The lender was not disclosed.

The competitive terms were not only the result of TruAmerica's status, but also of the strength of the multifamily market. “Lenders are realizing that the multifamily market in particular is very strong. We have seen above average rent growth and, based on a lot of projections, we are expecting even more rent growth,” says Eisendrath. “We are seeing that lenders have a very strong appetite for multifamily right now and are getting more aggressive on spreads, interest-only and overall deal structure.”

In an earlier story, TruAmerica said that it underwrites its loans for five years and believes that the market will hold out for at least that long, asserting that this cycle will “extend longer than others.” When asked his opinion, Eisendrath agreed. “I think there are a lot of positive attributes with workforce housing, like a lack of new construction and the growing renter pool,” he says. “I think that is going to bode well for owners over the next five years.”