The loan was originated by John Marr, a managing director at Greystone, on behalf of Alliance Management. It carries a 12-year term with a 30-year amortizing structure, eight years yield maintenance and is interest-only for the first two years.
The loan structure enables Alliance Management to sell or refinance the property after the eighth year with a much smaller prepayment penalty, and have a longer-term loan out to final maturity in the 12th year.
Hidden Lakes Apartments has a number of upsides, among them amenities including a concierge service, cyber café, travel services and modern clubhouse with pool and spa. It is also well located, being close to schools, shopping, parks and a major golf course.
Completing the transaction on behalf of Alliance Management was not without its challenges, according to Marr. “The owner sensed the strengthening of the Grand Rapids multifamily market two years ago and began an extensive property upgrade program, which was funded from property cash flow,” he told MHN. “The program was so well received that it was expanded beyond the initial concept and this caused a reduction in the partners’ distributions. The new loans enabled the owner to make the deferred as well as additional distributions to the partners and also continue the upgrade program, which further increases the value of their property.”
Appetite for Fannie Mae refinancing is exceptionally strong, and with recent lending caps raised, Greystone was “thrilled to be able to execute this option for more borrowers as need demands,” Joe Mosley, Greystone’s executive managing director and head of agency lending, said. “This particular structure from Fannie Mae DUS affords the flexibility we knew this client needed in order to obtain a longer-term loan with the option to prepay it early without a large fee.”
According to Robert L. Foote, the CEO of Alliance Management, Greystone has continued to prove its commitment to Alliance as a partner in assessing and developing the best-suited financing options for the company’s business goals.
“This refinance structure will allow us the cash out and monetize investor equity as well as fund our ongoing property upgrade program, which is a key differentiator for us in this competitive Grand Rapids market,” he added.
Marr concluded by noting that Greystone has extensive lending experience across the Wolverine state. “This market knowledge enabled Greystone to maximize the loan amounts for the owner,” he observed.