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TMG Closes $2.1M Apartment Loan

Tags: apartment loans, multifamily loan, 30 year fixed, Utah apartment loan,
Thursday, Jan 28, 2016
by Jeff

Transaction Description: The Madison Group (TMG) facilitated the $2,169,000 refinance of a 30-unit apartment complex in Provo Utah. The rehab of the property had only recently been completed and the income was finally stabilized. The borrower received a loan at 69% loan to value which met their needs for payoff underlying debt used for enhancing the property.  The loan is fixed for 30 years with an amortization of 30 years. The borrower received a rate of 5.25%. The loan does not adjust - it is fully fixed for 30 years. This met his financial goals to hold the asset for the long term, to enjoy the cash flow, and to be able to pass on to his estate without ever having to refinance. The loan is assumable in the case that the borrower or estate decides to sell the asset in the future   

Challenges: The borrower wanted to take advantage of the current low rates even though the property was only recently stabilized and underwriting needed to rely on future income. The borrower could have chosen lower rates on shorter term and shorter amortization loans, but was concentrated on a 30 year fixed product. This took some creative underwriting to be able to rely on future income and manage the debt service cover. As the property was dated prior to rehab, special care was necessary to understand the upgrades and the new in-place rent.

“Matching up the borrowers needs in a product that is available for the property are not always easy, said Jeff Meierhofer of The Madison Group who headed up the origination team. “But we have experience with the lender and the borrower and we were able to meet his long-term financial goals.”

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