Project Spotlight

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. 

The Challenge

Greystar Real Estate Partners has been a major presence in multifamily housing for almost 20 years, investing over $3.5 billion since its inception.  It is currently the largest multifamily operator in the country, managing over 190,000 units.  Together with another industry stalwart, Buchanan Street Partners, Greystar owns Shadows of Cottonwood, a 504-unit apartment complex in Irving, Texas.  It is an upscale complex, with three pools, a clubhouse, and an athletic center, located in an area of Irving known for its luxury single-family houses.

Like many investors today, Greystar and Buchanan Street viewed refinancing as a way to take advantage of historic low interest rates—but they also wanted a flexible prepayment schedule so that they could keep their options open.

The partners turned to Beech Street for a way to structure the deal to meet both objectives. 

The Challenge

In the fall of 2011, Sam Goldstein, CFO of the Galman Group, was getting a little uneasy.  Interest rates were at historic lows, but there was no telling how long they were going to last.  Looking ahead, he had four properties totaling 1,106 units with loans maturing at different times over the coming year. This represented a substantial portion of the company’s portfolio of approximately 4,140 apartments in the Delaware Valley, so Goldstein wanted to be sure he got the best possible deal on his refinancing.  Not only did he want to lock in these low rates, but he also wanted to lock in long enough so that he would avoid paying prepayment penalties—and he didn’t want to pay a large premium for doing so.

Having worked with Beech Street on eight smaller transactions in 2011 and early 2012, Goldstein felt confident Beech Street would come up with a solution. 

The Challenge

Wexford Property Management is a multifamily management firm serving Philadelphia, its surrounding suburban counties, and the greater Washington, DC metro area. When the time came to refinance its two Washington, D.C. properties, the company’s chairman and president, Eric Kretschman, wanted to reduce debt service.  He consulted Larry Paul, a director at Frankel Financial Corp, who suggested that Kretschman work with Beech Street.

FHA financing was a logical solution for Kretschman, but he never considered the option seriously—until Beech Street proposed it. Like most multifamily investors, Kretschman knew that rates on FHA finance are some of the best available anywhere. But like them, he was apprehensive about the due diligence that the FHA requires to ensure that borrowers and projects qualify for its programs.

The Challenge

Operating a skilled nursing and rehabilitation facility is a labor-intensive business.  There is a lot of one-on-one between patients and staff—and a facility’s reputation rises and falls on both the quality and quantity of its staff.  Care is highly regulated, and the avenues for cost cutting are limited.  Reducing debt service can help ensure a facility’s long-term viability and continuity of service.  Mike Gabriel of Arcadia Retirement Community approached Beech Street Capital looking to do just that—take advantage of historically low rates, and reduce his monthly debt service payment.  The existing loan for his 128-bed skilled nursing facility in Hamilton Square, New Jersey was a 35-year, $9.0 million FHA loan at 5.52% in its 28th year. 

The Challenge

The challenge facing the owners of Canyon Crossing, a 440-unit apartment complex on the west side of Lubbock, Texas, was synchronizing the financing of the complex’s two phases.  The loan on Phase I of 232 apartments was set to mature in February 2012.  The loan on Phase II in 2015.  In the best of all possible worlds, the solution would have been to consolidate the financing right now, but given the substantial prepayment penalty on the Phase II note, consolidation was hardly desirable.  Working through Meridian Capital Group, the borrowers approached Beech Street looking for an instrument with maximum prepayment flexibility.

“We had worked with Beech Street on a number of transactions starting in 2010, and we were impressed with their knowledge of the agencies,” said Harry Bookey, one of the principals.  “We felt confident that they would come up with a solution.”

The Challenge

What do you do with a borrower who wants the best of both worlds?  At Beech Street, we find a way to deliver!  That’s what Patrick Cadigan discovered when he approached Beech Street to refinance one of his apartment complexes. Exclusively represented by the real estate investment firm Greenwood & McKenzie, Cadigan had two objectives: refinancing his property at the best possible rate while postponing closing to the last possible minute to minimize his prepayment penalty.

The property, Amberway Apartments, is located in a residential neighborhood of Orange County, California.  Consisting of 272 units in 29 two-story buildings, the Amberway Apartments are well maintained.  Its studios, one-bedroom, and two-bedroom garden units are spacious and compare favorably to the competition. Common amenities include garage and covered parking, a fitness center, large courtyards, five 24-hour laundry facilities, a swimming pool and spa. The occupancy rate at the time of application was 97 percent.

The borrower desired a $30.0 million loan to refinance existing debt of $23.3 million.  The prepayment penalty represented a substantial portion of the difference.  Accordingly, he was in no hurry to refinance the loan, but he was worried that interest rates would rise if he delayed refinancing any longer. 

The Challenge

School House Trust, the owner of Christiana Meadows, a 648-unit garden-style apartment complex in Bear, Delaware, found itself in a difficult situation. It needed to refinance $26 million of existing debt, consisting of $22.0 million low-floater bonds issued by the Delaware Economic Development Authority, plus a floating rate second mortgage of $4.4 million. The problem was that it was depending on the net cash flow made possible by these bonds to fund an ongoing unit-upgrade program. The trust assumed that its only options were to sacrifice net cash flow and lock in a fixed-rate loan or turn to a new LIBOR-based floating rate mortgage in hopes that rates would remain low. Neither option was very appealing.

The Challenge

Time was getting uncomfortably tight for Mayfair Investors LLC.  The group faced a looming deadline to pay off a maturing loan on Mayfair Chateau Manor Apartments, a Class A apartment complex in an attractive Birmingham, Alabama, suburb.  They needed to refinance and to refinance quickly, so they turned to Beech Street Capital.  “We have worked with the team in Beech Street’s Birmingham office on several deals in the past,” said William Butler, executive vice present of Engel Realty and key principal for the deal.  “They’ve always come through for us.”

The Challenge

All things being equal, Goshen Terrace seemed to be an excellent candidate for refinancing.  Set back from the West Chester Pike on 36 wooded and beautifully landscaped acres, this apartment community in West Chester, Pennsylvania, had a new fitness center, lighted tennis courts, a 75,000 gallon swimming pool, and even a nature trail.  Even better, it was also close to dining, shopping, and nightlife. 

So when Steve Berger, the founder of Berger Rental Communities, was seeking a $32 million dollar loan to refinance the property, he was confident about his options. Russ Drebin, his broker at Meridian Capital Group, suggested that an agency execution would be a good fit for the property and referred Berger to Beech Street Capital. 

Berger was more than happy to work with Beech Street: he had been impressed by the quality of Beech Street’s team and the quality of execution they achieved when refinancing his company’s Toftrees complex in State College, Pennsylvania, just a few months earlier.