Continental Partners successfully arranged a $7,850,000 5-year fixed loan to refinance Beverly Grove Apartments in Portland, OR.

Transaction Details

Loan Amount: $7,850,000
Rate: 4.03% Fixed for 5 Years
Term: 30 years
Amortization: 30 years
LTV: 65%
DCR: 1.25x
Prepayment: 3, 2, 1
Recourse: Non-Recourse
Lender Origination Fee: None

Mitch Paskover

Transaction Description

Summary: Continental Partners successfully arranged a $7,850,000 5-year fixed loan to refinance Beverly Grove Apartments in Portland, OR. The Sponsor requested a fixed-rate, non-recourse, interest-only loan to refinance an existing Freddie Mac loan and provide cash out to investors. Beverly Grove Apartments is a 74-unit apartment community consisting mainly of two and three bedrooms, located in the highly desirable Gateway District of NE Portland featuring convenient access to I-84 and I-205 freeways.

Opportunity: Continental Partners approached a number of Lenders with this request including banks and credit unions. A number of Lenders who quoted the transaction were coming up with a loan amount short of the Sponsor’s requirement for a cash out, mainly due to the bank’s stress rates being too high. Lenders were also skeptical of the asset’s strength based on the lack of seasoning shown in the financials, as the sponsor executed a quick ramp-up in NOI in a limited amount of time. The property was only 70% occupied at the inception of the refinance process. The Borrower needed a lender that would be comfortable moving forward with the loan contingent on a stabilized occupancy by close of escrow without collection history.

Result: Continental Partners was able to source a Lender who understood the asset, the submarket, and the Sponsor’s business plan, ultimately delivering maximum cash out without any shortfalls in proceeds. The Lender lowered its stress rate to the actual rate of the note, allowing for the bank to deliver higher loan proceeds. Continental was also able to avoid an appraisal issue, by conducting an extensive market survey using rent comps to confirm with the lender the market occupancy and monthly rental rates for the comparable set. The lender ultimately decided to use Continental’s survey as a representation of the market, over the appraisal. The Borrower was also not able to stabilize the Property on time. Rather than delaying the closing of the deal, Continental worked with the lender to arrange a holdback of $250,000, which would be released to the Borrower 60 days after the property reached 95% Occupancy.