Continental Partners Arranges $38M for 4 LA Deals
- Jan 29, 2018
Continental Partners has secured $38.1 million in financing for four separate transactions in Los Angeles. The financing was arranged by Executive Vice President Zalmi Klyne and the deals cover 12 properties totaling 210 units.
“All of these properties are all located in growing LA submarkets where demand is continuing to outpace supply,” said Klyne, in prepared remarks. “We were able to successfully arrange competitive financing for all four sponsors by leveraging our capital relationships, getting the lenders comfortable with the properties’ respective submarkets, and implementing creative solutions to finance these deals.”
The company arranged $5.9 million in cash-out refinancing for a 41-unit property in the submarket of South Los Angeles. The three-year, fixed-rate loan has a two-year, interest-only period followed by a 30-year amortization. The non-recourse loan is priced at a rate of 3.5 percent for the first three years, 2.3 percent over the six-month LIBOR and adjusts semi-annually. The sponsor has only owned the property for eight months and was looking to pay off preferred equity.
Continental also arranged $9.9 million in cash-out refinancing for a 16-unit luxury community in West Hollywood. The company was able to find a lender that understood the property in order to lock in a rate prior to the Fed rate hikes, and secure financing before the existing note matured. The loan has a seven-year fixed rate priced at 4.1 percent. The non-recourse loan is sized to 59 percent of value and is structured with a 30-year amortization schedule. The loan totaled $618,750 per unit.
For another two assets, Continental secured $8.8 million in debt financing through Fannie Mae’s Multifamily Green Financing, which will be used to refinance the two properties located in the Westlake neighborhood of Los Angeles. Totaling 56 units, the properties were 100 percent leased at the time of the deal.
“To ensure compliance with Fannie Mae’s Multifamily Green Financing, the sponsor was required to demonstrate 20 percent energy savings across the properties, which was achieved by installing energy-efficient appliances,” noted Klyne, in a prepared statement. “Because the sponsor met these requirements, we were able to save the borrower 20 basis points on their initial rate and utilized 50 percent of the energy savings to increase the NOI.”
The communities’ green updates are expected to save $25,000 per year on average. The 10-year, interest-only, non-recourse loan is sized to 55 percent of value and priced at 3.9 percent.
The last deal entailed the arranging of $13.6 million in acquisition and renovation financing for an eight-property portfolio in South Los Angeles. Totaling 107 units across small assets, Continental had some difficulty finding the right lender. To overcome the challenge, the company cross-collateralized the properties and ended up securing a three-year, interest-only loan, which was sized to 70 percent of the total cost and offers a one-year extension option.
Images courtesy of Continental Partners