Project Spotlight

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.