Oak Grove Originates Fannie-Sponsored Financing Deal for Florida Apartment Portfolio
- Dec 29, 2011
December 29, 2011
By Barbra Murray, Contributing Editor
Oak Grove Capital has orchestrated financing for a three-property affordable housing portfolio in Southern Florida, owned by Banyan Realty. The national multifamily financial services provider originated three separate loans totaling approximately $46.2 million through Fannie Mae’s Structured ARM product.
“Speed of execution was key on this transaction and we closed all three transactions in 60 days,” Mike Rulf, a vice president with Oak Grove, told Commercial Property Executive.
The properties, all built between 1995 and 1999, include the 340-unit Buena Vista Place I & II in Windermere; the 312-unit Homestead Colony in Homestead; and the 288-unit Congress Park in Lake Worth. In approximate figures, the adjustable-rate loans for the apartment communities totaled a respective $18.3 million, $14 million and $13.9 million, featuring a starting rate of roughly 2.55 percent on a seven-year term and a 30-year amortization.
Banyan pursued the loans to finance the acquisition of its partner’s interest in the apartment portfolio. Oak Grove assessed the market and decided that the Fannie Mae financing would be the right fit. As per the housing lender’s description, the ARM product offers an attractive adjustable-rate option — equal to one-month or three-month LIBOR plus a mortgage margin — that can be used to fund loans delivered through the DUS product line.
“We considered all options available in the marketplace and settled on Fannie’s Structured ARM for the following reasons: lowest rate, flexibility to convert to fixed, keep floating rate, or pay-off with minimal prepayment cost with no yield maintenance, just 1 percent prepayment penalty after year one,” Rulf explained.
If there is a commercial real estate sector that the greater lending community has warmed up to, it is multifamily, but the road to financing is still paved with challenges. However, the path to government-sponsored enterprises Fannie Mae and Freddie Mac’s door remains smoother than most. “Fannie, Freddie and HUD have been a very stable source of capital for the multifamily sector throughout the economic downturn,” Rulf noted. “We would not say that it has become easier of late, rather it has remained stable for experienced borrowers with quality affordable assets. If you have good assets in good markets, Fannie and Freddie are going to be there.”