Atlanta Tower Secures Refi

Portman Residential and National Real Estate Advisors have secured refinancing for Sora at Spring Quarter, a 370-unit multifamily tower in Midtown Atlanta. The development has landed a five-year fixed-rate loan from Apollo, arranged by CBRE.

The 29-story property, located at 1000 Spring St., was delivered in January 2024. It features 12,836 square feet of ground-floor retail space.

According to Yardi Matrix data, the property is currently subject to a $117 million construction loan from Bank OZK.

The NGBS-Green-Silver certified tower is part of the broader Spring Quarter mixed-use campus, which includes the historic H.M. Patterson Home and Gardens and the recently completed Ten Twenty Spring. More than 250 retail stores, restaurants and grocers are within walking distance. Residents are nearby public transportation and employers like Microsoft, Google and Cisco.

Mike Ryan, Blake Cohen, and Taylor Crowder with CBRE Capital Markets’ Debt & Structured Finance in Atlanta represented the borrower in the transaction.

Refinancing post-construction

Upon construction completion, it is customary to move to permanent financing, according to Robert Martinek, director at EisnerAmper.

“When an apartment building reaches 90 percent occupancy and a DSCR of 1.25, many borrowers look for financing from HUD or Fannie Mae,” he told Multi-Housing News. “In the case of the CBRE loan in Atlanta, the owners of the Sora at Spring Quarter chose an alternative lender.”

Refinancing a newly built property soon after construction isn’t necessarily unusual, agreed Yardi Matrix’s Doug Ressler. It depends on whether interest rates have dropped since the original loan was secured. Refinancing can help lock in a lower rate, reducing monthly payments and overall interest costs.

“Developers might refinance to access equity for other projects or to cover unexpected costs,” Ressler noted. “A cash-out refinance can provide the necessary funds. If the owner’s or developer’s financial situation has improved, they might qualify for better loan terms, such as a lower interest rate or a longer repayment period.”

Owners align the refinancing decision with their long-term financial goals. But changes in regulations can significantly impact the refinancing process. Staying informed about any upcoming regulatory changes is crucial.

“An early refinance is quite common in this interest rate environment,” Pierre Debbas, co-founder of Romer Debbas, told MHN. “In many situations, loans are designed to provide developers with flexibility. Facilities such as construction-to-permanent or bridge-to-HUD loans are gaining popularity nationwide.”

Garett Bjorkman, co-CEO, and Cameron Gunter, founder & co-CEO of PEG Companies, told MHN that the 1000 Spring St. situation is unique because Apollo is providing five-year fixed-rate debt.

“This is an example of the secular change that has been happening in the credit markets as alternative asset managers are taking over the role of providing financing for more stabilized assets, which was once an area dominated by banks,” Bjorkman said.

Negative rent patterns are temporary

“The Southeast saw a boom in multifamily unit deliveries in recent years, which has resulted in some new properties providing concessions to attract tenants,” Steven Peden, principal, Avison Young, told MHN.

He noted that this trend has created slightly negative rent growth across the region. Given that the region continues to attract new residents and new multifamily construction has slowed significantly in recent months due to heightened construction costs and a challenging capital market, investors are confident that the negative rent growth will be short-lived as the market absorbs the influx of new deliveries.

“Midtown Atlanta is really where most of the growth is happening now,” Gunter added. “The area’s energy and convenience make it a natural draw, especially with some of the challenges downtown and Buckhead have faced. It’s become a key area for businesses and residents looking for a strong sense of community and opportunity.”