Colorado Real Estate Journal - October 21, 2015
Eric Tupler and Josh Simon of the Denver office of Holliday Fenoglio Fowler LP recently arranged $70.6 million in loans for two different borrowers in separate transactions. In the largest transaction, they arranged $41.8 million in financing for Del Arte Lofts and Flats, a 351-unit multihousing community at 151 Joliet Circle in Aurora. The other deal totaled $28.8 million for the refinancing of five apartment properties owned by Denver-based RedPeak Properties. On the bigger of the two deals, Tupler and Simon worked on behalf of the borrower, Advenir Inc., which purchased the Del Arte from Wood Partners for $52 million. Tupler and Simon placed the seven-year, 2.28 percent, adjustable-rate loan with three years’ interest only with Freddie Mac’s CME Program. The securitized loan will be serviced by HFF through its Freddie Mac Program Plus Seller/ Servicer program. “It provided them the flexibility to hold it for the sevenyear loan term or, basically, sell it before the seven years and pay only a 1 percent prepayment penalty,” Simon said. Advenir will rebrand the property as Advenir at Del Arte and will implement a minor capital improvement program to achieve greater rental premiums. Although a government agency, Freddie Mac looks at market- rate deals such as this much like a private lender, Simon said. “They are real estate people,” Simon said. Freddie Mac likes the location near Lowry and the Anschutz Medical Campus, he said. It also liked the strength of Advenir, a Florida-based operator, he said. The loan was attractive to Advenir because of its low rate, flexibility and it is a high-loan-toleveraged deal. “Freddie Mac has some pretty outlined programs,” Simon said. Life insurance companies also offer attractive financing options, but they tend to prefer lower-leveraged deals of 60 percent to 65 percent loan-to-value, “while this is an 80 percent LTV,” Simon said. “Every deal is very borrower specific and it depends on their profile,” whether they want agency financing or private financing, he said. “There certainly are ones who are focused on agency financing and who want to maximize leverage to maximize their returns, while others will take lower leverage to mitigate some of their risks in deals,” Simon said. For those putting more equity in the deals, life insurance companies sometimes can be a better fit, he said. In the other deal, Tupler and Simon secured $28.8 million in financing with a total of 220 units owned by RedPeak in and near Capitol Hill. “HFF provided broad market coverage to ensure that we met our investment objectives,” said Bobby Hutchinson, investment director for RedPeak. “The process was seamless and provided us with several attractive options to consider,” Hutchinson said. Although the lender wasn’t released, records show it was JPMorgan Chase. The properties and loan amounts include: • The 86-unit 1000 Grant (the former Burnsley Hotel), $12.2 million; • The 43-unit 929 Marion, $4.45 million; • The 32-unit 1075 Corona, $4.55 million; • The 32-unit 970 Pennsylvania, $4.05 million; and • The 23-unit apartment community at 1145-1153 Ogden St., $3.62 million. “These are all great properties in one of the best apartment markets in the city,” said John Winslow, principal of Winslow Property Consultants LLC. Winslow, who was not involved in the transaction, added that Mike Zoellner, president of RedPeak, “has a propensity to focus on the quality buildings with long-term upside.” Simon said there was a great deal of interest in refinancing the properties from a number of different lenders. “We had a lot of life companies, as well as local, regional and national banks, interested in it,” he said. Fannie Mae and Freddie Mac also would have refinanced the properties in a heartbeat, he said. “When it was all said and done, RedPeak decided to go with this bank program because of the terms, the flexibility and other factors,” Simon said. Lenders interested in the deal liked it because of the hot Capitol Hill market, the quality of the properties and the financial strength, reputation and experience of RedPeak, he said. “There is really not much to not like about this deal,” Simon said. “Lenders also liked that it was five different properties,” he said. “Even though the loans were not cross-collateralized, as they were five individual loans, lenders took into consideration that they had a portfolio of five properties,” which could help mitigate risk. RedPeak received a seven-year loan with a 3.91 percent interest rate. RedPeak’s Hutchinson said he looks forward to working with HFF in the future, “as we continue to grow our portfolio.” Other News Denver-based JCR Capital recently provided a $15.38 million mezzanine loan for the refinancing of a portfolio of 11 stabilized multifamily properties in California and Illinois with a total of 2,509 units. The loan was made by the JCR Capital Commercial Real Estate Finance Fund III LP.