Dealmaker: Capital One Closes Freddie Mac Loans Totaling $79M
Capital One, Bethesda, Md., provided Freddie Mac loans totaling $79.4 million to refinance 18 apartment communities in California and Georgia.
In southern California, Capital One provided Freddie Mac Small Balance Loans totaling $35.7 million to refinance 17 apartment communities. The sponsor, Los Angeles-based Positive Investments, invests in multifamily, office and hotel properties on behalf of its principals, institutional joint venture partners and private investors.
Andrew Kwok, Vice President in Capital One Agency Finance’s Newport Beach, Calif. office, originated the transactions. All 17 five-year fixed-rate loans have rates below 3 percent.
The subject properties, primarily located in the Los Angeles County cities of Covina, El Monte, Lynwood, Pacoima, Torrance and Whittier, range in size from five to 54 units.
Capital One also provided a $43.7 million Freddie Mac adjustable-rate loan to refinance Stratford Ridge, a 446-unit Class B apartment community in Marietta, Ga. Sponsor FCP, Chevy Chase, Md., is a Freddie Mac Select Sponsor.
Thomas Reynolds, Senior Vice President in Capital One Agency Finance’s Chicago office, originated the transaction. The 10-year SOFR-based loan has five years of interest-only payments followed by amortization on a 30-year schedule. The interest rate was below 3 percent.
Reynolds said the transaction combined balance sheet financing with an agency takeout, a good combination for a value-added strategy. “FCP turned to Capital One for balance sheet financing when it purchased the property in 2017 and subsequently made substantial improvements to common areas, amenities and upgraded units, which allowed it to grow property cash flow substantially,” he said. “FCP will use a portion of the proceeds from its new loan to make additional renovations. In effect, our original loan allowed FCP to take a community built in the 1970s, modernize it, create energy savings and ultimately secure long-term agency finance by unlocking proceeds from cash flow improvements and value creation.”
In this case, Capital One suggested FCP use a SOFR execution so it would not need to switch from LIBOR to SOFR at the end of 2021. “The reduction in basis points we gained more than made up for slightly higher cap costs at the front end,” said FCP Associate Cristina Istrate.
