CBRE Gets $1B in Financing for M-F Greystar, Goldman Portfolio Buy
- Feb 26, 2013
How do you get your hands on a billion dollars? Greystar Real Estate Partners and Goldman, Sachs & Co. kicked off 2013 with the announcement of plans to snap up an 8,010-unit multi-family portfolio from Equity Residential for $1.5 billion, and now CBRE Capital Markets’ Debt & Equity Finance group is helping the joint venture partners cull more than $1 billion to finance the acquisition, “Commercial Mortgage Alert” reported on Friday.”
CBRE had good raw material to work with in its pursuit of funds for the partners’ purchase. “Goldman Sachs and Greystar stepped up in record time with non-refundable earnest money and proved quickly that they are no- nonsense buyers,” Mike Bryant, vice chairman with CBRE Debt & Equity Finance, told Commercial Property Executive.
The portfolio consists of 27 high-quality apartment communities and CBRE secured seven-year Freddie Mac loans for each one of them, loans that are non-crossed and float over 30-day Libor. The two-stage funding transaction will conclude in late March, allowing Greystar and Goldman to complete the acquisition of the group of assets. When all is said and done, the joint venture will have enhanced its holdings with premier rental units in eight high-performing markets in Denver; Northern New Jersey; Phoenix; the San Francisco Bay area; Southern California; South Florida; and Washington, D.C.
The portfolio and the sponsorship combine to form the kind of union that the lending community simply cannot ignore. “[It has] excellent major apartment markets across the U.S., very little vacancy in each submarket and 30 percent equity investment to help mitigate any risk by the number one investment banking firm in the world,” said Bryant. Additionally, two-thirds of the properties will get a makeover over the next 36 months.
While multi-family remains a sector favorite among real estate lenders, it’s not every portfolio that commands such attention. But the climate for borrowers has certainly improved over the last few years and it appears that there are even better times ahead.
“Risk spreads are lower as the U.S. economy seems to have turned the corner and jobs pick up some momentum; at the same time treasuries have not moved a lot,” Bryant concluded. “The next year we should see interest rate spreads become more competitive as the CMBS market begins to compete again with Freddie, Fannie and the life companies for debt opportunities.”
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