Prometheus Gets $188M Mortgage for M-F Project in Silicon Valley
- Aug 21, 2013
Big property, big money. Prometheus Real Estate Group has secured a $188 million financing deal for Mansion Grove, a 1,000-unit apartment community in Santa Clara, Calif., in the heart of Silicon Valley. Commercial real estate financial intermediary NorthMarq arranged the first mortgage refinancing on the borrower’s behalf, relying on its relationship with TIAA-CREF and Allstate Life Insurance Co.
Mansion Grove is not your typical multi-family property. The complex, developed in three phases ending in 1990 and expanded in 2010, encompasses 855,600 square feet at 502 Mansion Park Dr. and spans 25 acres. The asset certainly attracted lenders’ attention but there were certain challenges, as bigger is not necessarily better from everyone’s perspective.
“Silicon Valley apartments are in high demand but the size presents its own problems, not only just from the dollar amount but by the pure number of units because most lenders are looking for a standard 200- to 300-unit property,” Jeffrey Weidell, president with NorthMarq, told Commercial Property Executive.
TIAA-CREF and Allstate were undeterred by the size of the property and the number of dollar signs, and came through with a loan featuring a 10-year term and a 30-year amortization schedule. Mansion Grove’s occupancy level of 98 percent certainly didn’t hurt in moving the transaction forward; although, today, a full tenant roster is not enough to seal a multi-family financing deal.
“Many of the major markets are experiencing high occupancy and growing rents, so I think [lenders] tend to look beyond toward the future and the growth trends of the market,” Weidell said. “And in this case I think the pluses and minuses were great forward-looking job employment and a healthy amount of new construction nearby.”
In the post-credit crunch era, lenders continue to be extra careful about doling out loans to property owners; however, the multi-family sector is still the real estate darling of the capital markets. “It hasn’t quite run its course,” said Weidell. “I think there are certain lenders who seem to be hitting their allocation, that don’t want to have too much of a percentage of their portfolio on multi-family. But in general, it’s still the preferred asset class. It’s been a fairly good run and we haven’t screwed it up yet.”