TODAY’S DEALS: ARA Completes Distressed Portfolio Sale

ARA completes a 10-property distressed portfolio sale; Marcus & Millichap sells a vintage San Francisco apartment for $4.75M; and George Smith Partners arranges $17M in financing.

A Sunbelt Portfolio Property

Houston—Atlanta-headquartered ARA has completed the sale of The Sunbelt Portfolio, a 10-propertry CMBS distressed portfolio located in Texas and Florida. The transaction took place over the course of two years. Nine of the total 10 properties have closed; The Cascades in West Palm Beach, Fla. is still on the market.

The nine assets that sold are in the Houston area and total 1,932 units. The group received over 240 offers during the course of marketing. ARA Houston-based principal David Wylie, ARA-Austin-based principal Jeff Patterson, and ARA Florida-based principal Avery Klann represented Byron Plant, who was the first receiver. Steve Harr, who was the second and last receiver, and New York-based Torchlight Investors, an independent SEC-registered investment advisor, focused on commercial real estate debt investments in the transaction.

“The assets are well located and in excellent condition relative to other distressed assets, but this was a very complicated transaction to execute,” says Wylie. “It is a great case study on a large distressed portfolio transaction that is a mix of both cash and seller-financed transactions that received more than 240 offers, which gave us great insight into the market. The pool of buyers across the portfolio included local, regional and national players with varying strategies and business plans for the individual assets.”

Marcus & Millichap sells vintage San Francisco apartment for $4.75M

San Francisco—Marcus & Millichap Real Estate Investment Services has sold a 30-unit apartment building in San Francisco for $4.75 million. The company reports that the asset sold well above its original listing price. The property, which was built in the 1920s, is located at 230 Central Ave.

Clinton Textor and Dimitris Drolapas, multifamily investment specialists in the San Francisco office of Marcus & Millichap, represented both the seller, a San Francisco family, and the buyer, Klingbeil Capital Management, in the transaction.

“High-net-worth investors have an appetite for well-located apartment buildings in dense San Francisco neighborhoods,” says Textor. “They are attracted to the strong fundamentals driving the city’s market, including low vacancies and high rents. As a result, there has been significant competition for these vintage assets, which seldom hit the market. In fact, this building has been owned by the same family for more than 45 years.”

George Smith Partners arranges $17M in financing

Los Angeles–Commercial real estate investment banking firm George Smith Partners recently arranged $17 million in financing for two multifamily properties in California and South Carolina.

Gary Mozer, principal and managing director of George Smith Partners, arranged $10.2 million in permanent financing on a 92-unit multifamily property in Los Angeles. Steve Bram, principal and managing director of George Smith Partners, arranged $7.2 million in permanent acquisition financing on a 192-unit multifamily property in Greenville, S.C.

“The multifamily market, like most aspects of commercial real estate, is making a steady comeback. However, conditions, especially with respect to capital, remain volatile and inefficient. Innumerable options and permutations have to be considered, including maximizing leverage, fixed- or floating-rate interest, recourse- or non-recourse guaranties, and prepayment flexibility,” says Mozer. “George Smith Partners works diligently as a fiduciary to our clients, leveraging our connections with capital to achieve the best structure and terms.”

On the Los Angeles financing, the $10.2 million loan is a 10-year fixed-rate, cash-out agency loan with a 30-year amortization. George Smith Partners obtained the loan at a 5.63 percent interest rate within 45 days of closing the original bridge loan. The borrower previously required a fast-close cash-out bridge refinance to facilitate acquisition of an unrelated asset. The most recent financing secured long-term fixed-rate debt.

“We worked with the sponsor to resolve underwriting issues and pushed the closing of the loan to minimize interest expense on the bridge loan,” explains Mozer. “By capitalizing on our company’s strong network of lender relationships, we were able to secure an agency loan that maximized proceeds, while waiving the exit fee on the bridge loan. We also worked with the lender to leverage the existing third-party reports, ensuring a timely closing with minimal costs.”

Gary Mozer was assisted by fellow George Smith Partners’ associates including Senior Vice President Steven C. Orchard and Senior Vice President Josh Roseman.

George Smith Partners also arranged a $7.2 million acquisition loan for a 192-unit multifamily complex in Greenville, S.C. The 10-year fixed rate loan was at 5.87 percent with a 30-year amortization.

“While the property was stabilized at close of escrow, an increase in the rental supply over the last three years caused a significant drop in occupancy, forcing the property into foreclosure. The lack of stabilized historical operating data made it challenging for lenders to underwrite the cash flow,” says Bram. “We were able to identify a lender that was not only comfortable with the secondary location of the asset, but was also able to underwrite the trailing three months of actual collections in order to maximize the loan amount.”

Steve Bram was assisted by George Smith Partners’ vice president, Allison Higgins.

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