HFF Facilitates $800M Refi for Starlight

The Toronto-based company will use the financing to reduce its exposure to interest rate hikes, extending the weighted average term to maturity to 6.1 years.

Altis at Sand Lake apartments in Orlando, Fla.

Starlight Investments has received an $800.45 million loan to finance a 23-property multifamily portfolio totaling 7,289 units across eight states.

HFF facilitated the financing for the Toronto-based real estate investment and asset manager on behalf of its Starlight U.S. Multi-Family (No. 5) Core Fund.

“The fund’s portfolio is comprised of recently constructed, institutional quality, Class A apartment communities with an average vintage of 2012,” Martin Liddell, Starlight U.S. Multi-Family’s chief financial officer, told Multi-Housing News. “The fund has acquired the assets in markets with strong economic and demographic fundamentals, specifically in cities where the population exceeds 1 million people and job and population growth are in excess of the U.S. average.”

 Moreover, Liddell said, the fund’s markets exhibit strong household income to rent multiples and balanced levels of new supply given the strong demand drivers. 

The loan was originated as a Freddie Mac Structured Pool Transaction and includes both fixed- and floating-rate components with five-, six- and seven-year loan terms. The financing will be utilized to fix the interest rate on a large percentage of the fund’s debt to reduce its exposure to rising interest rates. 

According to Liddell, the fund improved the interest rate on 80 percent of its mortgage financing and reduced its weighted average interest rate by more than 50 basis points, extending the weighted average term to maturity to 6.1 years.

“This was a very efficient financing solution for Starlight,” he said. “Through our partnership with Freddie Mac and HFF, we were able to finance all 23 assets through one structured pool transaction. The high quality and diverse nature of the portfolio and its cash flows resulted in a very attractive set of terms and the ability to lock the underlying rate several months before closing reduced our execution risk.”

Diverse Locations

The portfolio includes 23 properties located in the Atlanta, Austin, Charlotte, Dallas, Denver, Houston, Las Vegas, Nashville, Orlando, Phoenix, Raleigh, San Antonio and Tampa markets. 

“The portfolio has excellent geographical diversification with assets located in high growth suburbs,” Liddell said. “The high-quality nature of the portfolio and its presence in 13 stable and growing markets is a key strength and provides for a stable and defensive cash flow stream.”

Additionally, all of the communities provide high-quality amenities and in-suite finishes that appeal to Millennials and Baby Boomers, two key rental cohorts.

The properties boast an average occupancy of 93 percent overall. Approximately half of the units were financed under Freddie Mac’s Green Advantage program, which helps finance energy- and water-saving improvements.

The HFF debt placement team consisted of Senior Managing Director Matt Kafka, Managing Director Campbell Roche, along with Analysts Matthew Williamson, Tolu Akindele and Wilson Bauer.

In June of this year, a joint venture between Starlight Investments and an affiliate of Blackstone Property Partners acquired a six-property portfolio in Canada. The portfolio comprises six communities located in Toronto and Montreal, which include low-, mid- and high-rise buildings. 

Image courtesy of Starlight Investments

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