Dealmaker: Gantry Secures $91 Million for Office, Multifamily, Industrial
(Black Canyon Commerce Park, Phoenix.)
Gantry, San Francisco, arranged nearly $91 million in financing for a New Mexico multifamily community, a self-storage portfolio in the Southeast and an office in suburban Phoenix.
Gantry’s Phoenix office secured a $45.5 million permanent loan to refinance the Union 505 Apartments at 801 Locust Place NE in Albuquerque, N.M.
Gantry’s Adam Parker, Principal, and Chad Metzger, Senior Associate, with the firm’s Phoenix production office secured the loan on behalf of a repeat Gantry borrower. The seven-year, fixed-rate loan was placed with Freddie Mac, and features full-term interest-only payments. Freddie Mac agreed to underwrite the debt-service-coverage ratio using a 35-year amortization instead of the normal 30-year amortization. The borrower wanted to maximize loan proceeds as they were using the cash-out proceeds to purchase another asset.
The 572-unit community offers studio, loft and one- and two-bedroom renovated units in a garden-style format. The complex also features a newly remodeled clubhouse with Wi-Fi, fitness facility, outdoor sport court, landscaped open space and pool.
“While we have seen some turbulence in the multifamily financing sector early in 2023, Agency lenders remain active and provide necessary liquidity to tightening capital marketplace,” Parker said.
Gantry also secured $40 million in financing for acquisition of four self-storage facilities (in separate transactions) as the upleg for a strategic 1031 exchange. The portfolio includes three assets in Tennessee and one in Florida, encompassing 286,000 rentable square feet. The assets were assembled in a series of individual acquisitions requiring unique loans in both permanent, bridge and hybrid structures to optimize each financing.
Gantry’s Andy Bratt, Principal, and Amit Tyagi, Senior Director, with the firm’s Irvine, Calif., and Los Angeles production offices, respectively, secured the loans on behalf of the borrower, a multi-generational private family. All four fixed-rate loans were secured from Gantry’s roster of correspondent life company lenders. Two of the loans were for permanent loans of seven- and 12-years, respectively, each with significant interest only periods. Two of the loans were bridge loans, also done through a correspondent life insurance company, featuring extension options and an interest-only period.
“These assets were financed over a period of months during what has truly been one of the most volatile rate climates in a decade,,” Bratt said.
“The deeply inverted yield curve at the time of financing posed a unique challenge. All the assets had some level of lease-up to be achieved, but the yield curve inversion made short-term traditional bridge financing very expensive,” Tyagi said. “We were able to structure each loan with a fixed rate execution. Two of the loans were permanent loans, structured to accommodate lease-up, that provided rates in the high 5% to low 6% range and staggered maturities to help offset future refinance risk.”
The portfolio includes the following properties:
• Storelocal Storage Center at 2119 W Hillsborough Ave in Tampa, Fla.
• Storelocal Self Storage located at 500 Downs Blvd in Franklin, Tenn.
• Storelocal Self Storage located at 3797 N Old Port Royal Rd in Spring Hill, Tenn.
• Storelocal Self Storage located at 1212 School St in Spring Hill, Tenn.
Gantry also secured a $4.95 million life company loan for the value-add acquisition of a 56,000-square-foot suburban office space on four acres. The two-story building offers 278 park spaces and is located at 2225 W. Peoria Ave. in Phoenix within the Black Canyon Commerce Park, a 16-acre master planned business complex. Vacant space at the property is formatted for medical office as well as general professional uses.
Gantry’s Tim Storey, Principal, with the firm’s Phoenix production office, secured the loan on behalf of the borrower, an experienced private real estate investor. The fixed rate, short term bridge loan was provided by one of Gantry’s correspondent life company lenders.
“As banks have pulled back from new commercial real estate lending, our life company lenders have become more active as a stable source of commercial mortgage financing, Storey said. “This includes the bridge lending space, and even for office assets on a select basis. In this instance, a highly experienced sponsor saw an opportunity to acquire a well-appointed office building with some vacancy in place positioned to serve a range of tenant needs including medical office uses. With a clear plan of action and conservative underwriting, we were able to secure a fixed rate loan in line with the sponsor’s vision.”
