Los Angeles—Real estate investor and financial services specialist Greystone has provided a little more than $27 million in Freddie Mac Small Balance Loans for an 11-property multifamily portfolio in Los Angeles totaling 303 units. The loans were originated by Dale Holzer, a director in Greystone’s Newport Beach office.
The borrower, a private L.A.-based real estate investment group, acquired the properties, all located within Baldwin Village in South Central Los Angeles and ranging in size from 17 to 72 units per property, over the past three years. The loans, provided by Greystone under Freddie Mac’s Small Balance Loan offering, represent one of the largest single-borrower portfolios closed using the new platform.
As a result of the financing, the borrower will receive cash-out proceeds that will be returned to investors and will fund future seismic work to comply with the City of Los Angeles’ new seismic retrofit ordinance. Also, while the properties are classified as market-rate housing, 98 percent of the units will maintain affordable rent levels as a benefit from Freddie Mac’s terms.
“The 11 properties were spread out among four multi-asset entities, in combination with multiple investors, so it was imperative that the transactions closed concurrently and at the application terms,” Holzer noted. Loan terms for the Freddie Mac financing include 10-year fixed rate, non-recourse, LTV up to 80 percent, and a step-down prepay structure.
Multifamily lending has been growing significantly in recent years, but the most recent Commercial/Multifamily Real Estate Finance Forecast by the Mortgage Bankers Association predicts that the volumes will level off in 2016 and ’17. By the end of this year, the MBA reports that lenders will likely originate a total of $224 billion in permanent loans to multifamily properties, up 15 percent from 2014. That kind of increase next year is considered highly unlikely.