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Lender Pool Is Deep For “Strong Borrowers”

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AvalonBay secures $185 million to refinance a three-property portfolio, and sees high competition from lenders and very attractive terms.

There is a lot of talk about tightening debt for certain asset classes, but if you are a strong borrow with a class-A asset, the capital stack is your oyster. AvalonBay has secured a $185 million loan to refinance a three-property multifamily portfolio. The borrower saw tremendous competition from potential borrowers and was able to secure favorable terms.

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Although the rate was not disclosed, the loans were 10-year fixed rate with full-term interest only.

“This transaction confirms that it remains an excellent time for strong borrowers with quality properties to achieve attractive loan terms from a deep pool of prospective lenders,” Kip Kimble, senior vice president of Bellwether Enterprise and the loan’s originator, tells “There was competition from many lenders to be awarded this attractive financing opportunity.”

The three properties totaled 1,384 units and included Avalon Russet in Laurel, Maryland; eaves Woodland Hills in Woodland Hills, California; and Eaves Los Feliz in Los Angeles, California. “When we offered this financing opportunity to prospective lenders, we did not know if one lender would be awarded all three loans or if we would end up with multiple lenders, since the properties were in different regions of the country,” adds Kimble. “We received quotes for various groupings but ended up with the most competitive lender wanting to fund all three loans.”

New York Life Insurance Co. won the deal, offering what Kimble calls a competitive rate. “Having a competitive rate and interest only for the full term of the loans enhances AvalonBay’s cash flow from these three properties during the term of the loans,” says Kimble. “Additionally, AvalonBay likes the flexibility of having the three individual loans instead of a cross collateralized pool that would require release provisions if the company wanted to sell one of the properties or pay off one of the loans.”

—-Read How to Compromise on Universal Health Care on ThinkAdvisor.

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