Risk-Averse Lenders Aggressively Pursue Class-A Multifamily

DUBLIN, CA—There are a greater proportion of renters now more than ever, a trend that will most likely continue as long as the cost of homeownership remains unaffordable for many young professionals. And, as an ever-growing number of employers are being priced out of the San Francisco office market, these firms are turning to more cost-effective locations such as the Tri-Valley business parks of Hacienda and Bishop Ranch. These emerging employment centers further expand the renter pool available to communities such as Tralee Village Apartments, an affordable transit-oriented 130-unit multifamily community.

In a recent acquisition of Tralee, the tight timing of the best-and-final bidding process meant that the borrower, JB Matteson Inc., required real-time information on the acquisition debt. NorthMarq Capital reached out to several long-time life company relationships and provided the borrower with multiple competitive quotes within 24 hours of the request. After the seller selected JB Matteson as the buyer, NorthMarq Capital was able to provide an executable term sheet from PPM Finance within one business day. As a result, a team led by managing director Dennis Williams and vice president Tom Wight in NorthMarq Capital's San Francisco office arranged a $31.5 million permanent loan for the acquisition of the property. This is the borrower's sixth Bay Area multifamily acquisition.

The non-recourse 55% loan-to-value loan features interest-only payments for the full seven-year term and a competitive interest rate of 3.6% (quoted as a spread of 140 basis points during the seven-year UST). The borrower will benefit from the loan's flexible prepayment schedule of four years of yield maintenance followed by 2% in year five, 1% in year six and par in year seven. As the life company correspondent, NorthMarq Capital will service the loan and stay permanently involved to support both the borrower and the life company.

The class-A luxury community offers a mixture of one-, two-, and three-bedroom units featuring 9-foot ceilings, granite kitchen countertops, full-sized washers and dryers, and patios with balconies. Shared community amenities include a fitness center, pool and spa, business center and secured underground parking. The property is within close proximity to Hacienda Business Park and Bishop Ranch, as well as a myriad of shopping opportunities at Stoneridge Mall, Hacienda Crossings, Dublin Place, Persimmon Place and Rose Pavilion. The multifamily property is less than one mile from both Dublin/Pleasanton BART stations, as well as Interstates 580 and 680, providing residents with direct access to the entire Bay Area.

The Tralee Village transaction exemplifies a few important trends that are prevalent in Bay Area lending markets today, Wight says.

“We at NorthMarq Capital find that risk-averse lenders are still aggressively pursuing class-A multifamily loans in the Bay Area, with more attention paid to emerging markets such as Dublin,” Wight tells GlobeSt.com. “This trend is especially true when the borrower is a first-class owner/operator such as JB Matteson. The attractive interest rate we were able to obtain is testament to the fact that lenders are willing to sharpen their pencils to win multifamily business in the Bay Area. Overall, the sentiment among most lenders is that despite its high cost of living, the Bay Area is a unique market buoyed by strong economic fundamentals that will remain resilient to headwinds in the future.”

JB Matteson is a 50-year old privately held investment manager located on the Peninsula. On behalf of several hundred private capital investors, JB Matteson owns and operates class-A investment-grade multifamily properties located in major metropolitan areas on the West Coast. JB Matteson's other Bay Area properties include Ilara Apartments in Milpitas, CA; Millworks Apartments in Novato, CA; Rafael Town Center in San Rafael, CA; and Theatre Square Apartments in Petaluma, CA. JB Matteson financed all of these properties through NorthMarq Capital.

DUBLIN, CA—There are a greater proportion of renters now more than ever, a trend that will most likely continue as long as the cost of homeownership remains unaffordable for many young professionals. And, as an ever-growing number of employers are being priced out of the San Francisco office market, these firms are turning to more cost-effective locations such as the Tri-Valley business parks of Hacienda and Bishop Ranch. These emerging employment centers further expand the renter pool available to communities such as Tralee Village Apartments, an affordable transit-oriented 130-unit multifamily community.

In a recent acquisition of Tralee, the tight timing of the best-and-final bidding process meant that the borrower, JB Matteson Inc., required real-time information on the acquisition debt. NorthMarq Capital reached out to several long-time life company relationships and provided the borrower with multiple competitive quotes within 24 hours of the request. After the seller selected JB Matteson as the buyer, NorthMarq Capital was able to provide an executable term sheet from PPM Finance within one business day. As a result, a team led by managing director Dennis Williams and vice president Tom Wight in NorthMarq Capital's San Francisco office arranged a $31.5 million permanent loan for the acquisition of the property. This is the borrower's sixth Bay Area multifamily acquisition.

The non-recourse 55% loan-to-value loan features interest-only payments for the full seven-year term and a competitive interest rate of 3.6% (quoted as a spread of 140 basis points during the seven-year UST). The borrower will benefit from the loan's flexible prepayment schedule of four years of yield maintenance followed by 2% in year five, 1% in year six and par in year seven. As the life company correspondent, NorthMarq Capital will service the loan and stay permanently involved to support both the borrower and the life company.

The class-A luxury community offers a mixture of one-, two-, and three-bedroom units featuring 9-foot ceilings, granite kitchen countertops, full-sized washers and dryers, and patios with balconies. Shared community amenities include a fitness center, pool and spa, business center and secured underground parking. The property is within close proximity to Hacienda Business Park and Bishop Ranch, as well as a myriad of shopping opportunities at Stoneridge Mall, Hacienda Crossings, Dublin Place, Persimmon Place and Rose Pavilion. The multifamily property is less than one mile from both Dublin/Pleasanton BART stations, as well as Interstates 580 and 680, providing residents with direct access to the entire Bay Area.

The Tralee Village transaction exemplifies a few important trends that are prevalent in Bay Area lending markets today, Wight says.

“We at NorthMarq Capital find that risk-averse lenders are still aggressively pursuing class-A multifamily loans in the Bay Area, with more attention paid to emerging markets such as Dublin,” Wight tells GlobeSt.com. “This trend is especially true when the borrower is a first-class owner/operator such as JB Matteson. The attractive interest rate we were able to obtain is testament to the fact that lenders are willing to sharpen their pencils to win multifamily business in the Bay Area. Overall, the sentiment among most lenders is that despite its high cost of living, the Bay Area is a unique market buoyed by strong economic fundamentals that will remain resilient to headwinds in the future.”

JB Matteson is a 50-year old privately held investment manager located on the Peninsula. On behalf of several hundred private capital investors, JB Matteson owns and operates class-A investment-grade multifamily properties located in major metropolitan areas on the West Coast. JB Matteson's other Bay Area properties include Ilara Apartments in Milpitas, CA; Millworks Apartments in Novato, CA; Rafael Town Center in San Rafael, CA; and Theatre Square Apartments in Petaluma, CA. JB Matteson financed all of these properties through NorthMarq Capital.