LOS ANGELES—Advanced Real Estate Services has secured a $73.9 million loan to refinance a five-property, 479-unit multifamily portfolio in Orange, Los Angeles and San Bernardino counties. The borrower was able to secure the funding without incurring a prepayment penalty by refinancing under Chase's portfolio recapitalization program, which minimizes prepayment and closing costs and provided substantial cash-out proceeds.
“Chase had the existing mortgages and refinanced these under their portfolio retention plan,” Michael T. Elmore, EVP and managing director of Northmarq Capital, who secured the funds on behalf of the borrower, tells GlobeSt.com. “After two years the borrower can refinance with Chase and increase the loan amounts without a prepayment penalty. There was approximately $19.4 million in total cash out.” Advanced Real Estate will use the proceeds for future acquisitions.
Chase was the borrower's initial lender, so there was no need to shop around to different lenders; however, the full prepayment penalty would have been incurred if the borrower used another lender. The loan had an average interest rate of 3.78% with a 7-year term and a 30-year amortization schedule. “Since these were on Chase's books the process was simple and clean,” adds Elmore. “This structure is unique to Chase and allows them to increase their loan portfolio and retain great clients.”
While the borrower did not need to go to market with this deal, Elmore says that the lenders are still very competitive for multifamily properties. “Spreads and treasuries have moved, but with the agencies now into their 2017 budgets and the market is very competitive,” he adds. “Life companies, banks and CMBS are all competing too.”
The portfolio has 387,000 rentable square feet and sits on 23.8 acres of land. Each complex offers several floor plans, ranging from studio to three-bedroom units.
LOS ANGELES—Advanced Real Estate Services has secured a $73.9 million loan to refinance a five-property, 479-unit multifamily portfolio in Orange, Los Angeles and San Bernardino counties. The borrower was able to secure the funding without incurring a prepayment penalty by refinancing under Chase's portfolio recapitalization program, which minimizes prepayment and closing costs and provided substantial cash-out proceeds.
“Chase had the existing mortgages and refinanced these under their portfolio retention plan,” Michael T. Elmore, EVP and managing director of Northmarq Capital, who secured the funds on behalf of the borrower, tells GlobeSt.com. “After two years the borrower can refinance with Chase and increase the loan amounts without a prepayment penalty. There was approximately $19.4 million in total cash out.” Advanced Real Estate will use the proceeds for future acquisitions.
Chase was the borrower's initial lender, so there was no need to shop around to different lenders; however, the full prepayment penalty would have been incurred if the borrower used another lender. The loan had an average interest rate of 3.78% with a 7-year term and a 30-year amortization schedule. “Since these were on Chase's books the process was simple and clean,” adds Elmore. “This structure is unique to Chase and allows them to increase their loan portfolio and retain great clients.”
While the borrower did not need to go to market with this deal, Elmore says that the lenders are still very competitive for multifamily properties. “Spreads and treasuries have moved, but with the agencies now into their 2017 budgets and the market is very competitive,” he adds. “Life companies, banks and CMBS are all competing too.”
The portfolio has 387,000 rentable square feet and sits on 23.8 acres of land. Each complex offers several floor plans, ranging from studio to three-bedroom units.
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