December 16, 2015-January 5, 2016 —
COLORADO REAL ESTATE JOURNAL
— Page 19
Finance
by John Rebchook
CBRE’s Capital Markets’ Debt
& Structured Finance Services
recently secured $55.6 million in
financing on behalf of Los Ange-
les-based Gelt Inc. for its $74 mil-
lion acquisition of the Tamarac
apartment community in Denver.
(See related story on Page 1.)
Brian Eisendrath and Ross
Moore with CBRE’s Beverly Hills
office arranged a 10-year fixed-
rate loan with a five-year interest-
only component for the acquisi-
tion of the 564-unit community
built in 1977 at 3300 S. Tamarac
Drive.
The financing is a 75 percent
loan-to-value transaction.
“The fundamentals in Denver
remain quite strong with annual
rent growth exceeding 10 percent
in specific markets,” Eisendrath
said. “As a result, therewas strong
demand from lenders,” he said.
In additional to Denver’s fun-
damentals, the strength of Gelt
also helped it land an attractive
financing package.
“Given Gelt’s long-term strat-
egy in secondary growth mar-
kets, 10-year debt with maximum
interest only will allow them to
execute on their business plan
by providing solid cash-on-cash
returns to their investors,” Eisen-
drath said.
With the Fed appearing ready
to raise its rates and new banking
regulations in place, Gelt’s timing
for the acquisition and financing
was good.
“Given the volatility in the
capital markets, we were able to
navigate the new mandates and
provide the best terms possible,”
Eisendrath said.
Keith Wasserman, a co-found-
er of Gelt, was pleased with the
financing deal by CBRE.
“Brian and his team secured a
loan that allows us to continue
repositioning this well-built asset
while providing an attractive
value alternative for renters who
are priced out of the newer Den-
ver product,” Wasserman said.
“They were able to move fast,
providing lender commitment
prior to going hard on the pur-
chase, all the while securing
aggressive long-term financing
with seamless execution,” Was-
serman added.
JohnWinslow, principal of Win-
slow Property Consultants, who
was not involved in the transac-
tion, said the financing package
was typical for strong investors
buying apartments in the Denver
area.
“A75 percent LTV is pretty typi-
cal in today’s market,” Winslow
said.
“I’ve seen some really strong
players get even higher ratios,”
he said.
FromGelt’s perspective, the five
years of interest only is crucial.
“The cap rate might be 4.5
percent or 5, but really what the
investor is looking at is the cash-
on-cash return,” Winslow said.
“A common mistake people
make is that they see a property
sold at a 5 cap rate and they think
it is crazy,” Winslow said.
“But their cash-on-cash return
might be 12.5 percent in the first
five years and that is how buyers
sell it to their general partners and
investors,” Winslow explained.
“The cash-on-cash returnmakes
the investment look really good,”
he said.
Units at Tamarac range in size
from 450 square feet to 1,015 sf.
The seller, TruAmerica, had
renovated about 200 of the units.
Gelt will continue to renovate the
remaining units, upgrade com-
mons areas and add new ameni-
ties.
Pam Koster and David Martin
of the Denver office of Moran
and Co. represented TruAmerica
in the sale.
s
CBRE provided financing for the $74 million purchase of Tamarac.
