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HOUSTON-The Midwest investor obtained $19.2 million in refinancing for the 372-unit Oaks of Timbergrove Apartments. The borrower used the funds to pay back an equity partner that had helped with the asset’s acquisition and renovation.

Borrower Buckingham Village Apartments LP of Urbandale, IA acquired the class B complex at 1700 Seaspray Court in 2005. Since that time, the owner invested $2 million in renovations, and boosted occupancy from 70% to 95%.

“The financing allowed the owner to pay the equity partner that had helped with the acquisition and renovation. The financing provided an exit strategy for the partner, while allowing the owner to hold onto the asset for its stronger yield,” comments Stuart Wernick, president of Quantum First Capital Co., a Dallas real estate finance and advisory firm that arranged for the loan.

Situated on 12.8 acres in the Galleria submarket, Oaks of Timbergrove has an average unit size of 915 sf and offers one-, two- and three-bedroom units. The 24-year-old complex’s rents range from $599 to $899 per month.

Wernick, who worked with Quantum First Capital’s director Eli Gershenson on the loan arrangements, tells GlobeSt.com that the borrower’s original intent had been for short-term financing through a bridge loan. However, given the credit market turmoil and the need to leverage at 80%, it was decided that a loan through the Fannie Mae DUS program, structured through Green Park Financial of Bethesda, MD, would be the best plan for the borrower. The five-year loan has a three-year interest-only period, with a sub-5% interest rate.

“We’ve done other borrowings with Fannie Mae across the southeast and hopefully will be closing on another with them shortly,” Wernick says. “Because of prudent underwriting, Fannie Mae has maintained its activity and hasn’t had to tighten up its criteria.”

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