Berkeley Closes $325M Refinance Loan for San Francisco’s Gateway

It's a big property with a big financing deal. The Gateway, a 1,254-unit multi-family community spanning three blocks in San Francisco, has been refinanced to the tune of $325 million, courtesy of a loan closed by Berkeley Point Capital and Freddie Mac.

The GatewayIt’s a big property with a big financing deal. The Gateway, a 1,254-unit multi-family community spanning three blocks in San Francisco, has been refinanced to the tune of $325 million, courtesy of a loan closed by Berkeley Point Capital L.L.C. and Freddie Mac.

“Any lender would love to have this asset in their portfolio,” Mitch Clarfield, senior managing director with Berkeley Point, told Commercial Property Executive. “It’s a great piece of property in a great location where there’s a significant need for housing, the borrower group are long-term investors and it’s a low-leverage transaction.”

The Gateway has been a fixture in San Francisco’s Financial District since its completion in 1967, and it has been part of Berkeley Point’s portfolio since 1997, when the multi-family capital solutions provider and Freddie Mac first refinanced the nearly eight-acre property on behalf of the sponsor. It was the beginning of a long-term relationship between the three parties.

The most recent financing deal comes in the form of a 10-year, full-term interest-only loan featuring a fixed rate of 3.38 percent. “We financed The Gateway in 2005 and it was coming up for maturity again in 2015, and we went in early because we wanted the borrower to get a rate that ultimately ended up being near the lowest point in history,” Clarfield added. “The 10-year treasury was at 190 so it was within 30 basis points of its historic low.”

It took some expertise to orchestrate the transaction; after all, there were a few issues to contend with, including the loan size, the property’s age and the somewhat intricate borrowing structure, the details of which Berkeley is not at liberty to share. But the deal is done and the new Gateway loan now holds the distinction of being the largest single-asset loan in Berkeley Point’s quarter-century-long history. Size matters. “I can think of only one other building in San Francisco that would be this big, that would be worth this much,” he said. “There are buildings in New York that might be worth as much or more than this building, but there just aren’t that many three-quarters-of-a-billion-dollar apartment buildings.”

Large or small, multi-family assets continue to be the commercial real estate darling of the capital markets. It’s simple. “I think it’s not just lenders, I think it’s investors too, and I think the bottom line is that people don’t have to work in an office, and they don’t have to shop in a store but they do have to live someplace,” Clarfield concluded. “Office buildings are a function of employment and retail centers are a function of spending habits, but everybody needs a place to live all the time.”