Commercial Mortgage Lenders make Apartment loans

Commercial Mortgage Lender refinances 100 unit apartment complex in Los Angeles, CA

Commercial mortgage lenders appetite for apartment loans in southern California remains voracious from both agency and portfolio lenders.  With the low market vacancy rates and stable cash flow that many southern California apartment properties provide, commercial mortgage lenders are able to offer attractive borrowing costs to their borrowers.  For example, Financial Compound arranged a $5.5 million cash out refinance for an approximate 100 unit apartment complex in the San Fernando Valley portion of Los Angeles.  Built in 1967, the borrower purchased the property for $3 million in 1999.  The 5.1% interest rate for this 10 year fixed-rate loan with 30 year amortization was set at time of application signing, and the loan closing took less than 30 days.  There was no lender fee and closing costs were less than $10,000.  The lender agreed that in lieu of a reserve for repair of old and deteriorating roof shingles, the borrower is required to replace shingles during the loan term, and provided flexibility by using the borrower’s 7 year old survey.  Other accommodations included allowance for subordinate debt in the future and no reserve collected of for property insurance.

Commercial mortgage broker Financial Compound has been active in apartment financing and enjoys a close working relationship with fnma and freddie mac originators as well as bank and life insurance companies that are active with apartment loans.  Financial Compound notes that fnma loans can be challenging for smaller properties where losing a tenant or two during the loan application process can derail a transaction.  Borrowers may also want to consider whether the lender sets the mortgage interest rate at time of loan application signing versus at loan approval or closing.  Its truly a borrower’s market with apartment loans and quality transactions can command structured and customized loan terms from commercial mortgage lenders so long as the underwriting remains sound.