Dealmaker: Pillar Originates $55M for Midwest, Vegas Multifamily

Pillar Financial, Chicago, originated nearly $55 million for multifamily properties in Lafayette, Ind., suburban Detroit and Las Vegas.

Pillar originated $6 million with Fannie Mae to refinance Lahr Apartments, a multifamily property in downtown Lafayette. Joe Markech, Managing Director in Pillar’s Chicago office, originated the fixed-rate, 10-year term loan with a 30-year amortization schedule. Pillar sourced the transaction through Mike Dury of PR Mortgage, a Pillar Correspondent.

Markech said the borrower is an experienced owner/operator who specializes in acquiring, renovating and operating multifamily properties in the Midwest. The transaction closed Dec. 12.

“Pillar executed the loan with Fannie Mae to allow the borrower to achieve substantial cash out to pursue other multifamily property acquisition activities,” Markech said. “Lafayette is a very strong apartment community with high-levels of occupancy and certain barriers of entry to restrict other multifamily developments.”

The historic property was constructed in 1831 as the Lahr Hotel. In 1998, Lahr Hotel was renovated into the Lahr Apartments, an affordable housing property. At the end of the compliance period, Pillar’s sponsor acquired and conducted additional renovations to the property, converting it to market rate housing that features 74 unique one- and two-bedroom units in the four-story residential building. The property features ground floor retail tenants, including a high-end restaurant and the oldest bar in Indiana.

In Oak Park, Mich., Pillar originated a $10.28 million HUD 223(f) loan to refinance the Oaks on Lincoln.

David Wilkins, Managing Director of Pillar in the Bloomfield Hills office, originated the HUD fixed-rate, 35-year term loan with a 35-year amortization schedule for Kaftan Communities, a multifamily property owner/manager in Michigan and longtime Pillar client.

Kaftan Communities will utilize the loan to renovate the kitchen in each unit and to conduct other significant improvements to the property in 2018. These improvements will allow the property to remain at market rate rents. The 120-unit, two and three-bedroom garden style apartments range in size up to 1,460 square feet and feature a number of amenities, including eat-in kitchens, patios or balconies, washer/dryer hookups, closet space, full basements and a swimming pool with sundeck. Oaks on Lincoln is located within walking distance of parks, shopping centers and places of worship.

“We have always enjoyed our relationship with Kaftan Communities and believe this transaction will competitively position Oaks on Lincoln for the future,” Wilkins said. “The multifamily market in and around Detroit remains strong and all agency platforms are actively closing acquisition and refinancing transactions for qualified borrowers.”

Pillar also originated $38.366 million with Fannie Mae to refinance two multifamily properties in Las Vegas. The Fannie Mae seven-year term, floating rate loans can be converted to fixed-rate financing anytime between the end of the first year and end of the fifth year.

Pillar originated a $29 million loan with three years interest-only at a 2.22 percent spread over one-month LIBOR, resulting in an initial rate of 3.46 percent for Liberty Village Apartments, a multifamily community that features 720 units. Pillar also originated a $9.366 million loan with three years interest-only at a 2.36 percent spread over one-month LIBOR, resulting in an initial rate of 3.60 percent for Village Square Apartments, a multifamily community that features 409 units.

The loans refinanced bridge financing Pillar originally closed the acquisition of the multifamily properties out of foreclosure from Fannie Mae. Following acquisition, the sponsor conducted substantial renovations to reposition, enhance and secure both properties.

“This is the second successful refinance of a bridge loan with a permanent Fannie Mae take-out that Pillar has provided for this client,” said Edward Hussey, Senior Vice President and Head of Multifamily Production for Pillar. Working with Pillar since 2011, this longtime client has closed 10 multifamily transactions.