Advanced Real Estate Lands $263M Refi for SoCal Portfolio

NorthMarq arranged the six separate loans through Freddie Mac.
Countrywood. Image courtesy of NorthMarq

Advanced Real Estate has refinanced another six of its Southern California communities with the help of NorthMarq. The company secured a total of $263 million in refinancing loans for its portfolio totaling 1,255 units. NorthMarq arranged the individual loans from Freddie Mac that were structured with a 10-year term, full term interest-only and sized to 65 percent loan-to-value ratio.

NorthMarq’s Michael Elmore, Alex Kane, Joe Giordani and Brendan Golding arranged the loans for Advanced Real Estate. Kane said in prepared remarks that Freddie Mac, the existing lender, aggressively pursued the portfolio and successfully secured pricing waivers, pushed proceeds and waived a prepayment penalty to win the business.

The largest community in the portfolio, the 421-unit Uptown Fullerton, is located in Fullerton, Calif. The portfolio also includes the 190-unit California Palm Apartments in Santa Ana, Calif., the 161-unit Countrywood Apartments in Redlands, Calif., and the 76-unit Crestwood Apartment Homes in Lake Forest, Calif. The Advanced portfolio also includes two communities in Anaheim, Calif., the 301-unit Beachwood Apartments and the 106-unit Sundial Apartments.

According to Yardi Matrix data, the portfolio includes communities that were mostly built in the 1970s that offer varying ranges of floorplans including studios to three-bedroom units. NorthMarq told Multi-Housing News that the portfolio was acquired over time between the mid 1990s and 2016. The six properties in the portfolio are now all between 95 and 100 percent occupancy, NorthMarq also told MHN.

Uptown Fullerton. Image courtesy of NorthMarq

Elmore said in prepared remarks that the financing solution offered Advanced a way to decrease its overall debt service and receive a substantial cash out. NorthMarq told MHN that the cash out for Advanced totaled around $100 million.

Richard Julian, CEO of Advanced, said in prepared remarks that the majority of the proceeds from this pool will be reinvested into the Advanced Fund 21-2 that will launch this month. The fund will also seek capital from its private investor network and new investors to meet its goal of raising $125 million, Julian added in his prepared statement.

CONTINUING THE VALUE-ADD CYCLE

Julian also said in prepared remarks that these latest refinancings are part of the cycle where the company acquires properties, renovates them and then refinances and reinvests in them. Julian added in his prepared statement that the properties in this Southern California portfolio had already completed this cycle multiple times.

With the latest six refinancings, NorthMarq has hit nearly $3 billion in closings with Advanced. Last year, NorthMarq arranged a similar refinancing transaction for Advanced, who secured a more than $240 million refinancing for another six-property portfolio in Southern California in September.