$58M Financing Earmarked for Atlanta Portfolio Acquisition
- Nov 06, 2017
A private investor has received $58 million in financing to acquire and reposition a workforce housing portfolio in the Norcross submarket of the Atlanta metro area. George Smith Partners Inc. secured the financing for the buyer of the two vintage buildings. The capital package consists of $45 million in non-recourse acquisition debt and $13 million in joint venture equity. The loan is interest-only during the initial four years of the term, followed by a 30-year amortization.
“The lender appetite for affordable product is high, with both agency and CRA lenders demonstrating ongoing interest in financing this sector,” Michael Anderson-Mitterling, George Smith Partners’ senior vice president, told MHN. “The result is a two-fold benefit to sponsors and operators. By financing affordable assets correctly and utilizing operational efficiencies, sponsors can avoid overcapitalizing and instead focus on ensuring quality living that remains affordable without sacrificing yields.”
The two properties are from the ’70s and ’80s, and consist of 680 units. George Smith Partners leveraged additional factors to achieve attractive financing terms, including Fannie Mae’s Multifamily Green Financing program. This enabled an 80 percent loan-to-value ratio and a reduced interest rate of LIBOR plus 2.15 percent.
“In this lending environment, operators can maximize their returns while also providing quality housing for communities at an affordable price point for renters,” Anderson-Mitterling said.
Joining Anderson-Mitterling on the deal from George Smith Partners were Gary Mozer, principal & co-founder of the firm, along with Katie Rodd, Kyle Howerton and Nick Rogers. The firm also recently secured a loan for a Hollywood condo conversion.
“The newly formed joint venture equity partnership we arranged for the sponsor will allow an investment of $5.5 million into the two properties to upgrade the common area amenities and interiors, as well as the ability to implement a green-energy saving initiative and strategic management platform,” Anderson-Mitterling said. “The repositioning is key, as it allows our client to upgrade the amenities while simultaneously reducing operating costs through sustainability solutions.”
According to a recent report by Fannie Mae, the Atlanta job market has expanded by 4 percent compared to under 2 percent nationally. The Workforce Housing Committee of the National Multifamily Housing Council noted a need for an additional 4.6 million new apartments in the U.S. by 2030 and Atlanta is high up on the list.
Image courtesy of George Smith Partners