Dealmaker: NorthMarq Arranges $92M for Multifamily
NorthMarq arranged $92 million in financing for multifamily properties in Arizona and Minnesota.
NorthMarq’s Phoenix office completed recapitalization of the Stratford Apartments, 17625 N. 7th Street in Phoenix. The Debt and Equity team of Brandon Harrington, Bryan Mummaw and Tyler Woodard arranged a new $43,367,000 Freddie Mac senior loan and structured an $8 million preferred equity investment.
“By bringing in preferred equity and a new Freddie Mac loan, the sponsor was able to buy out current investors while still retaining control of the property for a long-term hold,” Harrington said.
The Investment Sales team of Trevor Koskovich, Bill Hahn, and Jesse Hudson advised the principal on the process. The initial and successor ownership entities are all affiliates of 3rd Avenue Investments of Phoenix, which has been an active buyer and seller of major multifamily projects in metropolitan Phoenix for seven years.
According to Trevor Koskovich, president of NorthMarq’s Investment Sales platform, the Stratford Apartments transaction was the culmination of a series of events leading to a prosperous outcome. “NorthMarq’s integrated platform of investment sales, and debt and equity execution provided this sponsor with the original opportunity, acquisition financing, advice on the value-add component, and the exit strategy that provided significant wealth generation.”
Meanwhile, Brett Hood, managing director of NorthMarq’s Chicago regional office, secured $41,479,000 in Freddie Mac debt to facilitate acquisition of Hinton Heights in Cottage Grove, Minn. The loan represented 79.8 percent of the subject purchase price featuring a seven-year fixed-rate term with three years of interest-only payments.
NorthMarq arranged financing for the borrower, an affiliate of Oak Residential Partners, through its OPTIGO status as a Freddie Mac lender. The subject acquisition represents the first for ORP’s latest fund vehicle, eclipsing 10,000 units acquired nationwide since company inception.
“Despite the dramatic rise in treasury yields shortly after putting the deal under contract, the sponsor was still able to lock in an attractive sub-three percent coupon rate for the term of the loan,” Hood said.
Hinton Heights is a 249-unit garden-style apartment community located in Cottage Grove, a suburb of St. Paul. Constructed in three separate phases (1990, 1994 and 1995), the property offers garages with direct-access private entrances to the units and immediate proximity to the local high school and retail. Spread across 24.2 acres, the property boasts large one-, two-, and three-bedroom floorplans. Renovated apartments include stainless steel appliances, vinyl flooring, upgraded cabinetry, upgraded fixtures, walk-in closets and washer and dryer machines. The sponsor will continue unit renovations and plans to modernize the community will include rebranding, painting the buildings, upgrading the clubhouse and fitness center and improving outdoor community areas.
The property is within a few minutes’ drive to several large companies including 3M, CHS, Ecolab, Travelers, Anytime Fitness, Securian, and Tradehome Shoes. Other large employers in the area include Renewal by Andersen Windows, Up North Plastics, Evergreen Industries, Hartford Insurance, and Marathon Oil. The property is located just off Highway 61 with easy access to I-494 connecting the area to the surrounding MSA.
“The subject transaction was an ideal fit for the Freddie Mac program, with 100 percent of the units considered ‘Mission Driven’ based upon in-place rent levels and the deal received significant pricing benefits,” Hood said. “Freddie stepped up and was able to execute at the higher leverage point while still providing interest only at an attractive coupon.”
