Dealmaker: Walker & Dunlop Structures $40M for Hotel-to-Multifamily Redevelopment

Walker & Dunlop, Bethesda, Md., structured $40.4 million in equity and debt financing to recapitalize The Mark Apartments, a 227-unit high-rise apartment community in Alexandria, Va.

Northpoint Realty Partners, Bethesda, Md., and Persimmon Capital Partners, Washington, D.C., recently completed an extensive redevelopment program that transformed the property from a hotel to a multifamily community in an area of high rental demand.

Led by Managing Director Jamie Butler, Walker & Dunlop’s structured finance team replaced the existing construction debt with a long-term capital stack including fixed-rate senior debt from Freddie Mac and joint venture equity from private property investment company RSE Capital Partners, Washington, D.C.

Butler noted the venture’s success in converting an “obsolete” hotel into an apartment building will help meet the overwhelming demand for housing in the submarket.

Located 15 minutes from downtown Washington, D.C., The Mark Apartments is close to public transportation and Interstates 395 and 495.

Walker & Dunlop also provided short-term bridge financing for borrower Thompson Michie Equities, Salt Lake City, to acquire Castile Apartments in Las Vegas suburb Henderson, Nev. The firm later converted the financing to a $56.5 milion permanent Freddie Mac loan. Walker & Dunlop Managing Director Trevor Fase closed both complex transactions.

Fase’s team closed a Lease-Up Loan for the borrower within one month of the initial bridge financing.

Completed in early 2018, the 498-unit property is nearing full occupancy; the Lease-Up Loan program allows borrowers to lock and close prior to stabilization. The 11-year fixed-rate loan included a full-term interest-only structure.