Southeast Multifamily Apartments Agency Financing

Background

Our client, an experienced real estate investor, had the opportunity to acquire a prime 250-unit Class A multifamily property located in a high-demand southeast market. The property was under contract with a 60-day close, but as the closing deadline approached, the investor faced an unexpected challenge. Their initial bank lender reduced their quoted loan proceeds, citing concerns with overall credit exposure to our client as the borrower. The bank’s reduction in loan proceeds left the investor short on the required equity to complete the transaction.

Compounding the situation, other banks with similar loan terms required the investor to move the majority of his existing deposits, which may have triggered technical defaults on his other multifamily and commercial real estate (CRE) bank loans. This created an urgent need for a solution that would allow the investor to secure financing with enough proceeds and without the requirement of additional deposits to avoid risking technical default of other bank loans.

Client’s Needs

The investor needed:

1. Closing deadline secure financing in time to close on existing contract.
2. Non-bank loan options banks loans required deposits and could create technical defaults with his other bank lenders.
3. Favorable loan terms to ensure the deal remained viable and he could still hit a sufficient IRR.

Challenges

1. Reduced Loan Proceeds: The original bank’s reduction in loan proceeds left the investor without sufficient cash equity to close the deal.
2. Deposit Requirements: Other bank lenders with similar loan terms required the investor to move significant deposits, which may have caused a technical default on existing obligations.
3. Tight Timeline: With less than 60 days remaining before the scheduled close, the investor needed a fast and effective solution.

Our Solution

Our firm immediately worked to structure a solution that would address all of the investor’s needs, mitigate risks, and allow the deal to close on time.

1. FreddieMac Loan Financing: We moved quickly to assist the investor in securing a FreddieMac loan which didn’t have a requirement for additional deposits like the other bank loan options.
2. Negotiate Purchase Extension: With the new FreddieMac loan terms in hand, we approached the seller to negotiate a 45-day extension on the purchase and sale agreement. In exchange, the investor agreed to make the 1% deposit go-hard, ensuring that no additional cash would be required from the investor to keep moving forward to closing.

Results

• Secured Financing with Better Terms: The investor was able to secure a FreddieMac loan with a similar terms the original bank financing without the need to move deposits or raise additional equity.
• Successful 45-Day Extension: The extension on the purchase agreement allowed the investor to complete the transaction without additional cash required or renegotiating other terms of the sale.
• Deal Closed Successfully: The acquisition closed within the 45-day extended timeframe, and the investor was able to add a great asset to his portfolio.

Conclusion

This case illustrates how our firm’s ability to structure creative and timely solutions can help real estate investors overcome complex challenges. By combining our deep market knowledge, strong relationships with lenders and equity partners, and expertise in multifamily financing, we were able to help our client successfully close a significant acquisition in a tight timeframe. The investor now has a stronger portfolio and has positioned himself for continued growth in the multifamily space.

Interactively engage distributed alignments via focused alignments.

Interactively engage distributed alignments via focused alignments. Dynamically fabricate excellent innovation for go forward technology. Intrinsicly impact empowered scenarios after cost effective outsourcing. Synergistically productivate pandemic e-business rather than state of the art e-tailers.

Interactively engage distributed alignments via focused alignments.

Interactively engage distributed alignments via focused alignments. Dynamically fabricate excellent innovation for go forward technology. Intrinsicly impact empowered scenarios after cost effective outsourcing. Synergistically productivate pandemic e-business rather than state of the art e-tailers.

• Interactively engage distributed alignments
• Interactively engage distributed alignments
• Interactively engage distributed alignments
• Interactively engage distributed alignments
• Interactively engage distributed alignments

Interactively engage distributed alignments via focused alignments.

Interactively engage distributed alignments via focused alignments. Dynamically fabricate excellent innovation for go forward technology. Intrinsicly impact empowered scenarios after cost effective outsourcing. Synergistically productivate pandemic e-business rather than state of the art e-tailers.