Colorado Real Estate Journal - August 5, 2015
Josh Simon and Kristian Lichtenfels of the Denver office of Holliday Fenoglio Fowler LP recently arranged financing of $77.5 million for two apartment communities, one in Denver and the other in Fort Collins. The financing was on behalf of Jeff Sanders, principal of Boulder-based Mountain View. The communities are the 205- unit Block 32 at RiNo in Denver and the 240-unit Terra Vida in Fort Collins. In two separate transactions, Simon and Lichtenfels arranged a $36.94 million, 20-year, 3.95 percent fixed-rate loan secured for Terra Vida and a $37.86 million, 20-year, 3.98 percent fixed-rate loan for Block 32. Mountain View paid $43 million in February 2014 for Block 32 and paid $39 million for Terra Vida in April 2014, according to public records. “When Jeff Sanders bought the properties, he assumed low-leveraged HUD loans that were in place on the two properties,” Simon said. When the prepayment penalty was over, Mountain View replaced them with Fannie Mae loans. “We had a tremendous amount of interest from life insurance companies as well as Fannie Mae-approved lenders,” Simon said. Most life insurance companies, however, won’t provide the “15-year-plus” time frame that the borrower wanted, he said. The Fannie Mae loans were secured through Baltimore-based M&T Realty Capital Corp. The Fannie Mae loans allowed Sanders to access some of his “trapped equity” in the extremely well-performing apartment communities, he said. “M&T is very strong in the Fannie Mae loan business,” Simon said. “Last year, (HFF) did more than $700 million in Fannie Mae and this year we will do more than $1 billion,” Simon said. Terra Vida, located at 3707 Precision Drive in Fort Collins, is near Interstate 25 and Harmony Road. It is less than eight miles from Colorado State University’s main campus. Completed in 2012, the three-story, Class A property has an average unit size of 935 square feet and is 96.3 percent leased. Amenities include a junior Olympic swimming pool and a 5,400-sf clubhouse featuring a 24-hour fitness club, pet washing station, pool table and complimentary wireless Internet. Block 32 at RiNo is on a 4.14-acre site at 3200 Brighton Blvd. The property is near Interstates 70 and 25 and is less than two miles from downtown Denver’s Union Station. Completed in 2014, the four-story building has a mix of studio, one- and two-bedroom apartments averaging 916 sf each. The 96-percent-leased community includes amenities such as a resort-style swimming pool with a hot tub, poolside bar, 15,000- sf landscaped courtyard with fire pits and ping-pong, barbecue area, dog spa with enclosed dog park, state-of-the-art clubhouse, fitness center, community kitchen, pool tables, lounge and business center. “Both, in my opinion, are very well located and are true Class A projects,” Simon said. “And Block 32 will benefit because Denver plans a $49 million improvement plan along Brighton Boulevard.” Interestingly, as a government agency, Fannie Mae is not as interested in the fundamentals of a market-rate property as are the private life insurance companies, Simon said. The location, quality and amenities are much more important to a life insurance company than those factors are to Fannie Mae and other government agencies, he said. “Fannie Mae is designated to do all quality types of loans for apartment, from affordable, workforce housing to student housing and market-rate housing,” Simon said. While Fannie Mae provides a “wide gamut” of financing programs and options, in today’s market, rates typically are lower for affordable and workforce housing than for newer, market-rate apartment communities, he said. Indeed, the financing for these two communities would be more expensive today. “It would probably cost 40 more basis points today,” he said. The borrower, he said, is thrilled. “To have 20-year financing below 4 percent is pretty great,” Simon said. Other News Boulder-based Loftus Development obtained $19.4 million in construction financing for its planned 111-unit, three-building, three-story apartment building at 707 S. Boulder Road in Louisville. Gordon Mickelson, senior director, Dale Stewart, vice president, and Mark Lindgren, investment analyst for the Denver office of NorthMarq, arranged the financing on behalf of Loftus, a longtime NorthMarq client. The apartment community Loftus plans will include a clubhouse with business and fitness centers and a pool. Other features will include 9-foot ceilings, washers and dryers, granite countertops and ceramic tile bathrooms. Greg Benjamin, a senior vice president, and Jeff DeHarty, an associate producer for the Denver office of NorthMarq Capital, recently arranged $29.25 million in financing for a 402-unit apartment community in Odessa, Texas. They arranged the financing for the borrower, a division of Weidner Investment Services Inc.