$23,954,000 10-Year Fixed Rate Perm for 240-Unit Seniors Multifamily; Western US

Transaction Description:

George Smith Partners secured a $23,954,000 loan for a 240-unit market rate, multifamily property in Western United States. While not deed restricted, the Property is marketed only to seniors. The first mortgage has a 10-Year term at a 3.61% fixed rate, 30-year amortization, with 60 months of interest only.

Despite a requirement to pay defeasance to prepay an existing fixed rate loan two years prior to maturity, the Sponsor was able to generate over $5 million of net cash proceeds and reduce the borrowing rate by over 50 bps. The loan was priced in February when interest rates were particularly volatile and increasing rapidly. GSP negotiated a spread of 2.31% as well as having the Lender agree to do a forward index lock on the 10-year Treasury at 1.30%. When the loan closed, the 10-year Treasury had increased 43 bps to 1.73% which would have yielded an all-in rate of 4.04%. The higher rate would have significantly reduced the net proceeds and made the refinance non-economic; but, due to the early index lock, the all-in rate was effectively locked at 3.61% with the rate held though closing.