CLAYMONT, DE-The Galman Group closed on its acquisition of Whitney Apartments here thanks in part to a relatively new program offered by Fannie Mae. The new program provides more debt proceeds than under traditional Fannie Mae programs if the borrower agrees to make value-add improvements to the property.
Galman Group’s total investment in the apartment community came to roughly $50 million after closing costs, financing and the future value of the improvements, according to Capmark Finance VP Brian Campbell, in the firm’s Horsham, PA, office, which originated the transaction. The transaction was supported by a $39 million fixed-rate, permanent financing package of first-mortgage and mezzanine debt originated by Capmark through its Fannie Mae DUS program.
Specifically, it was the Community Investment Mezzanine Fund LP, a partnership between RCG Longview and Fannie Mae formed last year, which funded the mezzanine debt. The 78.5% LTV financing has a seven-year term with interest-only payments for the first five years, followed by a 30-year amortization. Under the program, Campbell tells GlobeSt.com “if you are committing to spend money to improve the property Fannie Mae will lend a larger amount under a more aggressive debt coverage ratio.” In Galman’s case it received 20% more debt proceeds than it would have under a traditional Fannie program, he adds.
Situated on 16.4 acres, Whitney Apartments is located at 3000 Society Dr. The multifamily property is comprised of 18 three-story, garden-style buildings and three seven-story, mid-rise buildings. The 511 units total 623,364 sf and are 90% occupied.