Advanced Real Estate Services Secures $240M Refi for Multifamily Portfolio

Corona Pointe Resort. Image courtesy of NorthMarq

Advanced Real Estate Services, Inc., has refinanced a six-property, 1,223-unit multifamily portfolio in Southern California with $240.4 million in loans from Freddie Mac and Fannie Mae arranged by NorthMarq. The financings generated more than $100 million in cash-out proceeds that will be used as the initial investment into the $250 million Advanced Fund 20-1 for new multifamily acquisitions.

Three of the properties are located in Orange County, two in Riverside County and one in Los Angeles County, according to Michael Elmore, executive vice president/managing director of NorthMarq’s Newport Beach, Calif., office, which handled the refinancing transactions. Elmore said in a prepared statement that Freddie Mac financed the first five assets for $204.6 million during the initial phase of the COVID-19 crisis and held all the financial terms without change.

READ ALSO: 5 Questions for Fannie Mae’s Doug Duncan

Pacific Palms Apartment Homes, a two-building, 149-unit property at 111 W. Orangewood Ave., and 2045 S. Haster St. in Anaheim, Calif., were refinanced with a $35.9 million, 10-year interest-only loan at a 2.71 percent interest rate by Fannie Mae further into the crisis. According to Elmore, Fannie Mae also held all terms and conditions, noting both lenders have long-term relationships with Advanced.

Advanced Real Estate Services managed to secure attractive financing during the peak of the pandemic. Richard Julian, the company’s president, attributed that success to its relationships with NorthMarq, Fannie Mae and Freddie Mac. In prepared remarks, he noted that Advanced already has three new properties in escrow that were purchased off market and is aggressively seeking more assets.

READ ALSO: How Combining the Capital Stack Mitigates Risk

All the remaining assets were financed through Freddie Mac and received 10-year loans with five years of interest only, followed by a 30-year amortization schedule. The interest rates were locked in at 2.84 percent. The assets are:

• Corona Pointe Resort, a 714-unit property at 3957 Pierce St. in Riverside, Calif., that was refinanced with a $121 million loan
• Corona Pointe Townhomes, a 63-unit property at 11511 Magnolia Ave. in Riverside that was refinanced with a $14.3 million loan
• The 5800 Apartment Homes, a 149-unit property at 5800 South St. in Lakewood, Calif., that was refinanced with a $35.6 million loan
• Avignon Apartment Homes, a three-building encompassing 88 units at 1361 and 1375 West Valencia Drive and 220 Basque Ave. in Fullerton, Calif., that was refinanced with a $19.8 million loan
• Washington Place, a 60-unit property at 1311 E. Washington St. in Santa Ana, Calif., that was refinanced with a $14 million loan.

Previous Deal

In June 2019, NorthMarq’s Elmore arranged refinancing for another Advanced Southern California property, securing a $56 million Freddie Mac permanent loan for the 320-unit Highland Pinetree Apartments in Fullerton. The transaction provided $28 million in net cash out to be used toward new acquisitions.

Formed in 1982, the Irvine, Calif.-based company funds all its investments with private equity, handles renovations in-house and manages the properties. The firm owns and operates more than 9,000 units of multifamily housing throughout Southern California.