$18,905,000 Acquisition Loan for a Class A Colorado Springs Apartment

Transaction Description: Jonathan Lee arranged the financing for the acquisition of a 208 unit stabilized apartment building in Colorado Springs, Colorado. Located next to Fort Carson, one of the largest military bases in the country, the subject was over 98% occupied at time of close. Over 70% of occupants are on current active duty. The non-recourse loan is interest only at 4.33% for the first six years of the term before amortizing over a 30 year schedule for the remaining four years of the loan.

Challenge: The asset is predominantly occupied by active personnel who require 30 day lease cancellation notice when called for deployment. This allows for the potential of high vacancy in times of national crises. Base closures that occurred in the late 1990’s have left a lingering stigma within the lending community to base-centric multi-family assets. To generate solid returns for investors, the Borrower requested both maximum I/O and leverage.

Solution: Using the property’s historical data and coupling it with deployments in Afghanistan and Iraq, GSP proved occupancy dipped, but did not overwhelm the economics of the property. GSP Analyst Adam Candler, a 6 Year veteran of the US Navy, demonstrated to lenders that the base offers amenities and key services to families of soldiers who are deployed, lending assurances that family are likely to remain upon deployment. GSP also showcased the growth of Fort Carson with $2 Billion invested in the base over the past ten years, indicating that Fort Carson is a core military installation that will reasonably withstand future Pentagon cuts.