Project Spotlight

The Challenge

The rental market in the New York MSA has become increasingly attractive for investors.  With credit remaining tight, many would-be apartment buyers have become renters.  The developers of The Gotham in Jersey City wanted to take advantage of trend.

Unfortunately, their funds were tied up in this magnificent 220-unit, 22-story high-rise building, the first luxury apartment since the 1950s to be located blocks from waterfront.  In addition to panoramic views from the upper floors, The Gotham features 20,000 SF of commercial space and a 340-space, four-story parking garage.  

With interest rates at historic lows, the principals—Ironstate Development and Panepinto Properties—sought a cash-out refinance of The Gotham to invest in other development opportunities.  The challenge was securing a loan large enough to compensate for the substantial prepayment penalty on their existing loan.  In addition, the property was subject to a payment in lieu of taxes (PILOT) agreement with Jersey City, which expired in 2020.  This agreement would make underwriting especially complicated. 

The principals turned to Beech Street.  Having worked with the company before, they felt confident that Beech Street could find a way to complete the transaction successfully. 

The Challenge

Raintree Partners follows a straightforward acquisitions strategy.  Headquartered in Southern California, the company looks for multifamily properties with a deal size above $10 million located in high-growth western markets.  Their goal is to acquire these assets at attractive values, optimize operating performance through proactive asset management, and execute value-add redevelopment plans. 

Ventura Colony Apartments, a 272-unit complex in Ventura, California, fit the profile.  The complex is located in the Ventura County MSA north of Los Angeles, which has shown strong apartment market fundamentals in recent years.  The apartments themselves had a number of features that made them a good prospect for Raintree.  They are attractive, consisting of 22 residential units, with a clubhouse and fitness center, two swimming pools with spas, a tennis court, BBQ areas, covered parking, and multiple playgrounds.  But the property was built in 1989, and although well maintained, would benefit from the kind of refreshing that is one of Raintree’s strengths.  It was appraised at $60 million.

The challenge was time.  Archstone, the seller, was shedding a number of properties in preparation for divestiture by the Lehman Brothers estate in fall 2012.  Raintree needed a lender who could help them close on the deal quickly. 

The Challenge

Entrepreneur Monte Lee-Wen founded the Partnered Property Acquisition Group a decade ago to help individual investors build wealth through commercial real estate investing. The PPA Group is now a multi-faceted commercial investment and servicing corporation headquartered in Austin, Texas.  It has a well-managed, well-performing portfolio of 2,838 units, primarily in Texas, that it also manages.

Among them are three Class B properties the PPA Group purchased in 2008, Kenton Place, Sunset Canyon, and Peppermill, all located in the San Antonio MSA.  Together, they total 942 units. The three properties were financed through a blanket first mortgage loan and mezzanine financing.   

With interest rates at record lows, the PPA Group decided to refinance.  When it approached Beech Street, the company had a number of specific requirements.  First, it sought to pay-off the existing blanket first mortgage while meeting a strict maturity deadline.  Second, it wanted the proceeds to cover the mezzanine debt, closing the loan without coming out of pocket. 

The Challenge

Since opening its Florida offices in May this year, Beech Street’s deal flow from Florida has been exceptional.  In just four months, Mitch Sinberg and Mike Wallace, who head up the Florida offices, closed over $53 million in agency debt for new acquisitions.

Two of these deals were conducted for Robbins Property Associates, an experienced owner and operator with 12 multifamily properties in Florida and Maryland.  The borrower turned to Beech Street to finance the acquisition of Ashley Lake Park in Boynton Beach and Cooper’s Pond in Tampa, which together have 763 units.   

Of critical importance to the borrower was taking advantage of historically low interest rates as quickly as possible, giving them a clear early view of the proceeds they could realize from these deals.