TODAY’S DEALS: Meridian Capital, Capital One Arrange $64M Interest-Only, Cash-out Refinance

Carlsbad, Calif.—Meridian Capital Group LLC, in partnership with Capital One Multifamily Finance, negotiated the $64 million refinancing of Palm Island, an age-restricted multifamily property located in Fountain Valley, Calif., on behalf of a sponsor based in Orange County, Calif.

The 10-year loan, provided by a CMBS lender, features a competitive fixed-rate of 4.47 percent and interest-only payments for the full term. The transaction was a cash-out refinance of a first and second mortgage by a new first mortgage with a lower rate.

The refinancing was originally structured in 2013 as a 10-year mortgage with five years of interest-only payments. Due to volatility in interest rates during the summer of 2013, the borrower decided to put the transaction on hold until the bond markets stabilized. All sides waited on standby for more than a year as the market rebounded and the loan terms became even more attractive.

The transaction closed very quickly with significantly better terms than the original structure from 2013 (namely additional interest only and a lower interest rate). Meridian Capital Group Managing Director Seth K. Grossman, who is based in the company’s Carlsbad, Calif., office, and Capital One Senior Vice Presidents Greg Reed and Kristen Croxton, who are based in Capital One Multifamily’s Newport Beach, Calif., office, worked in concert with the sponsor to structure and negotiate this transaction.

The Capital One team has a long-standing relationship with the sponsor and knew the interest-only feature available in the CMBS market would be accretive to their business plan. Reed and Croxton consulted Mr. Grossman of Meridian to tap into his expertise with non-agency lending, ensuring the client was presented with the best available financing alternatives.

“Greg and Kristen have been great to work with over the years and the two platforms complimentary skills sets have been a tremendous benefit for everyone involved,” said Grossman. “The Capital One Multifamily team clearly put the client’s needs first, as evidenced by their perseverance over the course of the year to close in a short timeframe once rates were most competitive,” he added.

The 456-unit Palm Island property is located at 11300 Warner Avenue in Fountain Valley, Calif. The property is leased to seniors 55 years of age and over and has amenities catering to an active lifestyle including a 24-hour surveillance system, community center, library, card room, billiard room, fitness center, computer room and heated pool and spa as well as numerous planned social activities.

Hollywood apartments building trades hands for $3.4M

Los Angeles—Marcus & Millichap, a commercial real estate investment services firm with offices throughout the United States and Canada, announced the sale of 1719 North Wilton Place, a 24-unit apartment building in Hollywood, Calif. The $3.4 million sales price equates to $141,667 per unit and $353 per square foot.

Michael DiSimone, senior associate; Ron Harris, executive vice president investments; and Paul Darrow, senior associate, all in Marcus & Millichap’s Los Angeles office, represented the seller.

“Built in 1960, this Hollywood apartment asset has had approximately 25 percent of its units remodeled over the last year and continues to benefit from revenue enhancement through renovation,” says DiSimone. “The property is proximate to some of the most desirable entertainment, shopping and dining options in Los Angeles,” adds Harris.

The 1719 N. Wilton Place apartment building is situated between Franklin Avenue and Hollywood Boulevard and is not far from the Hollywood/Western Metro Station, U.S. Highway 101 and downtown Los Angeles. The property consists of one two-story building situated on a 11,680-square-foot parcel and features six bachelor apartments, nine single units, five one-bedroom/one-bath junior apartments, three one-bedroom/one-bath units and one two-bedroom/two-bath unit. The building features controlled access entry, on-site laundry, 22 parking spaces, a tankless water heating system and separate meters for gas and electricity.