CHICAGO, ILLINOIS (June 23, 2022) – Brett Hood, managing director at Northmarq’s Chicago debt/equity office, secured the $199,088,900 recapitalization of 17 multifamily properties in Iowa, Nebraska, and South Dakota.
Northmarq quickly arranged this financing by Fannie Mae through its in-house DUS platform lead by recent hire Jeffrey Ketron, head of Northmarq’s National Multifamily Production Team. The borrower, Monitor Finance, is a large, long-time client of Northmarq based in Wayzata, Minnesota.
The Fannie Mae refinancing includes 14 separate loans across the properties. The high-occupancy portfolio contains a total of 2,784 units all qualifying as “mission-driven” based upon the affordable in-place rents. Notably 98 percent of the units qualified as affordable for residents at 60 percent of Area Median Income (AMI).
“It was a large opportunity with a very experienced client on assets producing historically strong cash flow growth,” said Hood. “Because of the affordability component, both Agencies were very aggressive in competing for this refinance business. We were able to rate lock at application with Fannie Mae and take interest rate risk off the table right from the start. Ultimately, we were able to increase Monitor’s proceeds from what was locked because of the improving property performance.”
All 17 properties had existing fixed rate agency debt with approximately six to eight years of loan term remaining. “While the sponsor still payed significant prepayment premiums, the relative cost hasn’t been this low in years given the yield curve and how flat it is,” Hood said. “The sponsor recognized the material value appreciation across these assets since acquisition, cashed out above the existing debt and closing costs, while resetting into new 15-year fixed rate debt on an interest only basis.”
The loan amounts ranged from $5.6 million to more than $36.8 million. All the loans were at 70 percent maximum loan-to-value (LTV), with a debt service coverage ratio of 1.25x.
The largest loans included:
• Camelot Village: The 485-unit property in Omaha, Neb., received refinancing in the amount of $36,853,000.
• Platinum Valley Apartments: The 264-unit property in Sioux Falls, S.D., received refinancing the amount of $24,141,000.
• Village at Westchester: The 224-unit property in Des Moines, Iowa, received refinancing in the amount of $20,964,000.
• Westwood Apartments: The 202-unit property in Omaha, Neb., received refinancing in the amount of $16,314,900.
• Colonial Village and Woodland West: These two properties combined, totaling 168 units in West Des Moines, Iowa, received refinancing in the amount of $15,511,000.
Northmarq’s Fannie Mae team was able to move quickly, closing all loans between 45 to 60 days from start to finish. “Our team did an absolutely fantastic job turning this around in a very compressed timeframe,” Hood said.