Walker & Dunlop Secures $52M in Financing in CA

The firm arranged the 10-year Freddie Mac Green Up loan for a 565-unit community located in the Arden Arcade neighborhood, on behalf of the new owner, OpenPath Investments.

Walker & Dunlop Inc. secured a $52 million Freddie Mac Green Up loan on behalf of OpenPath Investments for The Eleven Hundred Apartments, a 565-unit community located in Sacramento, Calif. The borrower acquired the property from Virtu Investments in June for a price tag of $69 million or approximately $156.94 per square foot, as Yardi Matrix Data shows.

Located at 1100 Howe Ave., The Eleven Hundred consists of 45 buildings, including townhouses, studios and luxury one-, two- and three-bedroom units. Apartments features air conditioning, dishwasher, fireplace in selected units, private balcony or patio and semi-private entries. Amenities include 22 laundry facilities, fitness center, clubhouse, volleyball and basketball courts, playground, picnic and barbecue area, three lighted tennis courts, spa and two swimming pools. The community offers 1,500 grade-level parking spaces and outside storage units.

Eleven Hundred was built in 1961 and since 2015 has undergone extensive renovations, including more than $6.5 million in improvements and repairs to common areas and the interiors of 535 units. OpenPath plans to invest $400,000 into the property, half of which will be allocated to green upgrades. After the improvements are implemented, the property will be certified by ENERGYSTAR® for Multifamily and the Environmental Protection Agency, while the annual utilities savings are expected exceed $100,000.

The class B garden-style community is situated within the Arden Arcade neighborhood, six miles east of downtown Sacramento, in close proximity to US Route 50 and Interstate 80, offering access to schools, and many shopping, dining, and entertainment options. Nearby is the 32-mile American River Recreational Trail, featuring jogging and bike paths, fishing, kayaking, canoeing and rafting.

According to Yardi Matrix data, the property is 93.8 percent occupied, the occupancy rate ranging between 91.4 and 94 percent in the past 12 months.

Financing Details

The 10-year loan was structured with five years of interest-only payments, a 75 percent loan to value, and a debt service coverage ratio of 1.25x. Senior Vice President Mark Grace led The Walker & Dunlop team.

We were able to offer very compelling loan terms utilizing both an experienced borrower’s renovation capacity and the Freddie Mac Green Up program. The borrower had already factored many green renovations into the acquisition business plan, so we capitalized on the Green UpSM program which allowed us to deliver additional leverage and significant rate savings to our client,” said Grace in a prepared statement.

This acquisition marks OpenPath’s first entry into the Sacramento market, and Walker & Dunlop was instrumental to ensuring a smooth execution for this transaction,” added Peter Slaugh, founder & managing member of OpenPath.

The company is considering four to six acquisitions in the value range of $60 to $125 million over the next eighteen months. Recently, OpenPath, in a joint venture with Atlas Real Estate Partners, sold a garden-style community in Layton, Utah.  

Images courtesy of The Eleven Hundred