Colorado Real Estate Journal - March 4, 2015
Walker & Dunlop Inc., a publicly traded mortgage lender based in Bethesda, Maryland, is bullish on Denver. So bullish that Walker & Dunlop made about $500 million in loans in the Denver area last year. The majority of the loans were for apartment buildings, although the company, with about a $590 million market cap, also made loans for some manufactured housing communities and office buildings in the Denver area. Combined, Walker & Dunlop made more than 25 loans in the Denver area in 2014. They ranged in size from a $1 million supplemental loan to one for more than $65 million. The company, which trades under the symbol WD, said it could not reveal details of the largest loan. In one deal, Ellen Kantrowitz, senior vice president, led the Walker & Dunlop team that arranged a $59 million U.S. Department of Housing and Urban Development loan for 300 East 17th Avenue Apartments in Denver. The 411-unit apartment community is owned by Maxx Properties. Maxx Properties is using the proceeds from the refinance to upgrade the community, which was built in 1985. “We’re doing a tremendous renovation there. We are going to transform the courtyard and really bring the building up to modern standards,” said Eric “Rick” Weiner, CEO of the 78-year-old, family owned Maxx Properties. Maxx Properties owns about 3,300 apartment units in the Denver area. “We are in seven states and Colorado is our best performing market,” Weiner said. Now is a great time to renovate communities, Weiner said. “The apartment market has never been hotter here and in Colorado,” Weiner said. “Everyone wants to live here, especially millennials, to take advantage of our great economy and quality of life,” Weiner said.
He said they are renovating every property they own in the Denver area. “That really has been our focus for the past two years,” he said. “We also want to take advantage of these incredibly low interest rates,” Weiner said. “Really, this is a perfect storm as far as demand and low interest rates,” he said. Maxx Properties has even locked in a number of 35-year loans. “We’re long-term holders,” he said. “We don’t sell.” Walker & Dunlop did a great job for them at 300 East 17th Avenue Apartments, he said. “I think a broker we utilize in New York put us together with them,” Weiner said. “It was really a great experience working with them,” he said. “They had a great program with great terms and a great interest rate,” Weiner said. Going forward, he said Maxx Properties would continue to use a variety of lenders, depending on the apartment community and the programs offered by the lenders. So why is Walker & Dunlop so bullish on Denver? “The economy is thriving in the Denver area,” a Walker & Dunlop spokeswoman told Colorado Real Estate Journal. She noted that Forbes magazine ranked Denver as the fourth best city in the nation for business in 2014. She also said Denver is bolstered by its diverse economy, which includes technology, telecommunications, mining, energy and the arts. “With current real estate market trends, financing options and increased population growth, Colorado has become a premier destination for employment, residency and recreational activities,” the company noted. The Denver apartment market last year boasted record rents and very low vacancy rates, which is a trend that is expected to continue. Walker & Dunlop pointed to Denver’s low unemployment rate, now at 4.1 percent. High employment has resulted in above-average apartment occupancy rates and rising rents, the company noted. Those economic basics also have made Denver a sought-after market from investors, the company said. “Investors have expressed additional interest in attractive loan options for value-added sales and recently Colorado has seen a surge in out-of-state investors,” the company said. In addition to the 300 East 17th deal, other transactions in the Denver area included: • Andrew Gnazzo, a managing director, originated a 10-year Fannie Mae loan for Windsor at Broadway Station. Walker & Dunlop expedited the process, allowing the borrower to lock the rate and close on a tight time frame for a 1031 exchange; and • Trevor Fase, a senior vice president, originated a supplemental loan for the Preserve at City Center in Aurora. Walker & Dunlop generated the first loan on the property, a 10-year, fixed-rate loan, in 2013. In the latest deal, the borrower obtained a $6.35 million supplemental loan for value-add amenities. The average size of a loan that Walker & Dunlop made in 2014 in Denver was $19 million. Walker & Dunlop has a minimum loan size of $3 million and no maximum loan size. Last November, Walker & Dunlop acquired a Denver office through its acquisition of the Johnson Capital loan origination and servicing platform