story apartment building in Reno, Nevada

GSP successfully placed the $6,000,000 refinance of a 243-unit, 11-story apartment building in Reno, Nevada. The property was purchased by the Borrower as a limited service hotel and subsequently converted to “For Rent” apartments. The refinance proceeds were used to pay off the existing capital stack including a bridge 1st Trust Deed and a private mezzanine loan. The non-recourse loan is fixed for 10 years at 4.80%, amortized over 30 years. Challenge: The Sponsor extensively renovated the property to convert it from a hotel to apartments. The asset came on-line as rental apartments during the recession. While it leased-up quickly, the income has been volatile over the last few years due to the weak Reno market. Although the income had stabilized over the last 6 months, lenders were hesitant to lend on year-over-year declining income. Solution: GSP identified a lender that was comfortable with the volatile income given the increasing occupancy over the last 6 months as well as the relatively low leverage loan request. The property had historically maintained cash flow well above the lenders minimum dcr constraint.