Johnson Capital Closes $75M, Nine-Property Deal for Florida Multi-Family Buildings

Johnson Capital just closed a $75 million debt and equity financing deal for one of its clients, facilitating the acquisition of a 1,271-unit portfolio of Class B-minus and Class C apartment communities in Florida and Texas.

February 6, 2012
By Barbra Murray, Contributing Editor

Lenders are keen on the multi-family market, and the focus isn’t just on Class A communities. Acting on behalf of Santa Ana, Calif.’s Focus Development, Johnson Capital just closed a $75 million debt and equity financing deal for one of its clients, a Southern California-based full-service real estate investment and development firm, facilitating the acquisition of a 1,271-unit portfolio of Class B-minus and Class C apartment communities in Florida and Texas.

Johnson Capital orchestrated a strategic partnership with a private, low-profile equity source for the purchase of the nine apartment properties, and placed $48.6 million of Fannie Mae financing with Centerline Capital. Johnson Capital had its reasons for going with Fannie Mae as opposed to Freddie Mac. “With the Fannie Mae process, you get better pricing across the board,” Neil Bane, principal and head of the equity division at Johnson Capital, told Commercial Property Executive. “Our client gets better pricing and the lenders are able to achieve better pricing, and they sell it to the street because of the volume of the portfolio.”

And a bevy of equity providers took an interest. “The borrower has good experience in terms of renovation, redevelopment and repositioning, so there was some good upside,” he said. “And the fact that the properties were in relatively good markets that appear to have good upside and the client is buying at a pretty good cap rate — an 8.5 to 9 percent cap rate — gave those Fannie Mae lenders, who would otherwise not feel comfortable, the comfort to do the deal.”

The fixed- and floating-rate debt came in the form of loans totaling $35.8 million for five properties in Tampa and two in Orlando, and $12.8 million of bridge financing for the remaining two properties, located in Pasadena, Tex.

“It’s often hard to get floating rate programs on B and C properties, I think we did a good job of being able to identify a number of lenders who were willing to do that here,” Bane said.