Financial Compound arranged approximately $18 million in long-term fixed rate financing, representing 100% of the purchase price, for the acquisition of two transitional apartment complexes with a combined 200 units in Los Angeles, CA for an experienced local apartment operator. The business plan for the properties is to perform capital upgrades (approximately $4,000 per unit) and increase rents 11%. The apartment loans represented 100% of the purchase price, and approximately 92% of the “all-in cost”, including rehab costs, interest reserve, and all fees and closing costs. Properties are approximately 95% occupied. Because the borrower was on a short timeframe for both loans, Financial Compound worked closely with the lender to process these loans, from application to funding, in about three weeks.
While the borrower sought fixed rate permanent loans, the properties are in transition and one of the properties does not have enough cash flow to support the debt service on the requested loan amount. Financial Compound was able to identify a permanent lender willing to fund loans for both properties with no holdbacks. For the property with insufficient cash flow, the lender included an interest reserve in the loan to supplement the mortgage payments until the property cash flow covers the debt service.
Loan terms included: 6.20% fixed interest rate; 10 year term, 30 year amortization (first 5 years interest only); LTV: 90% as-is, 77.5 stabilized, 1.10 DCR; 1.25% lender fee, Non-recourse.
See also : Commercial Mortgage Broker