Watermarke Properties Secures $123M Refi for California Portfolio

Colonnade at Sycamore Highlands. Image courtesy of Greystone

Watermarke Properties has refinanced a two-property, 560-unit multifamily portfolio in Riverside, Calif., with $123 million in HUD-insured loans provided by Greystone.

The transaction was originated by Dan Sacks and Ilan Bassali of Greystone.

The company has owned the 288-unit Colonnade at Sycamore Highlands and 272-unit Castlerock at Sycamore Highlands since purchasing them in August 2007 from the California State Teachers’ Retirement System for a total of $113 million, according to Yardi Matrix data. CalSTRS had owned the properties since June 2000, acquiring them for approximately $53 million.

The two HUD-insured Section 223(f) loans finance the two assets with long-term fixed-rate debt. The loans both carry 35-year terms, representing 77 percent loan-to-value. The loan for Colonnade at Sycamore Highlands, located at 5880 Fair Isle Drive, was for $63.4 million. The loan for Castlerock at Sycamore Highlands, located at 5700 Lochmoor Drive, was for $59.6 million. Further details on the terms of the new loans were not disclosed.

Yardi Matrix reported Colonnade at Sycamore Highlands previously had a 35-year HUD 223(f) loan in the amount of $46.8 million that was funded in September 2018, matured in October 2053 and carried a note of 4.23 percent. Castlerock at Sycamore Highlands also had a 35-year HUD 223(f) loan with the same terms and maturity in the amount of $46.4 million, according to Yardi Matrix.

Sacks said in a prepared statement the two Class A properties are examples of quality sponsorship and well-run management. He said Greystone was able to provide ownership a long-term financing solution in today’s increasing rate environment. Greystone was ranked as the top HUD lender in 2021, originating more than $3.3 billion.

Bassali added in prepared remarks many borrowers are contemplating sales with valuations at all-time highs but others are looking to maximize capitalization and continue to own their assets.

Property Details

The properties were completed in 2000 and have a total of 31 three-story buildings spanning just over 30 acres. Both offer one- and two-bedroom floorplans. Amenities include fitness centers, swimming pools, clubhouses, bocce courts, outdoor fireplaces and BBQ areas. Situated near the University of California, Riverside, they serve students and offer furnished units. All units have washers and dryers, above standard ceilings and high-speed internet; many have fireplaces.

Colonnade at Sycamore Highlands had 98.6 percent occupancy at the time of the refinancing. Apartments range in size from 714 to 1,060 square feet with an average of 892 square feet. Castlerock at Sycamore Highlands had 98.2 percent occupancy when the refinancing transaction closed. Apartments range in size from 720 to 1,118 square feet with an average of 935 square feet.