Dealmaker: Bascom Group Refinances $235M Multifamily Portfolio

Bascom Group, Irvine, Calif., refinanced an 11-property multifamily portfolio for $235 million.

The private-equity Bascom Group specializes in value-added multifamily investments.

The refinanced properties included six California communities: The Square Apartments in Downey, Camden Village Apartments in Fremont, Del Flora Apartments in Redlands, Courtyard on 68th Apartments in San Diego, Juniper Terrace Apartments in Escondido and Southtown at Main Apartments in Santa Ana. The portfolio also included 52nd Marketplace in Arvada, Colo., Prescott Lakes Senior Apartments in Prescott, Ariz., McKinney Orchid Apartments in McKinney, Texas and Fifty 101 and Lyric Apartments in Las Vegas. The entire portfolio is part of Bascom’s third discretionary fund, Bascom Value Added Apartment Investors III LLC.

Bascom worked with several capital market partners and lenders to complete the refinancing. CBRE Vice Chairman and Managing Director Brian Eisendrath and Vice President Annie Rice, JLL Senior Managing Director Charles Halladay and Director Jamie Kline and Talonvest Capital Co-Founder Tom Sherlock and Relationship Manager Erich Pryor arranged the debt financing; Comerica Bank supplied five loans, Silvergate Bank funded two and TCF Bank, New York Life, Citizens Business Bank and Texas Capital Bank funded one loan each. The refinance produced more than $39 million in additional loan proceeds, a 76 basis point reduction in overall interest rate spreads and a 16 percent decrease in portfolio debt service payments.

Most of the new loans had spreads over LIBOR ranging from 180 basis points to 200 basis points and interest-only periods between 24 and 36 months.

“This change allowed us to cash out a significant portion of equity, yet still improve our projected cash-on-cash returns,” said Bascom Senior Principal Chad Sanderson. “Over that past seven months, we have seen a tremendous shift in the capital markets. Both interest rate spreads and the indices have moved dramatically lower.”

Bascom Group Senior Principal James D’Argenio noted the refinancing extend Bascom’s debt term with minimal upfront costs and preserved the firm’s flexibility to sell the assets with little to no prepayment premiums or lockout periods.