The Madison Group (TMG), a leading
source of multi-family financing nationwide, arranged $3,400,000 in loan
proceeds
for the purchase of two apartment
buildings in Salt Lake City, Utah. The
borrower’s goals were to do a maximum leverage loan on properties that
had a good potential return on investment. TMG
secured the financing with a 3-year
bridge loan with a fixed rate of 4.75% at
75% loan-to-value ratio.
The two apartment buildings are former student housing facilities in the
popular Sugar House area of Salt Lake City. They were previously part of the Westminster
College housing portfolio. The buildings
are considered to be in a great, hot market location, and have low vacancy
rates. One building has five one-bedroom, one-bath units and 10 two-bedroom,
one-bath apartments. The other building
has 15 one-bedroom, one-bath apartments.
Both buildings feature on-site laundry facilities and off-street
parking. The buildings needed some remodel work in order to increase below
market rents and improve the investor’s cash flow.
The challenges for the TMG team for completing the
transaction included: one of the properties had no financials available; the
debt service coverage was lower than required underwriting guidelines; and the
properties were under contract at below market capitalization rates.
The Madison Group was able to put together a successful
transaction for the buyer by securing an interest only loan at 75% leverage
along with additional funds for repairs of the property. The interest only option allowed the borrower
to debt service the loan with the current income in place, while making repairs
to the units. Once the repairs are
completed and the owner is able to establish historical financials, the
property will be eligible for conventional financing.
“The
buyers originally came to us seeking a Fannie Mae loan,” said Angela Kesselman,
TMG’s associate director of finance. “Due
to the restricted cash flow, the loan dollars were constrained
significantly. We approached one of our
local lenders who agreed to provide a bridge product, which offered max
proceeds, interest only payments, and the repair money for the project. We feel confident that this property will
perform well for the client moving forward.”
The
financing was arranged by Angela Kesselman at The Madison Group.
The Madison Group (www.madisongroupfunding.com) is a
commercial loan broker and consultant specializing in financing for investor
properties nationwide. TMG provides flexible and reliable capital for real
estate acquisitions, refinances, and re-capitalizations for a variety of
property types including: multifamily,
mobile home parks, credit tenant NNN net lease, office, retail, industrial,
self-storage and other commercial properties in the United States. Established in 2001, The Madison Group’s
intention is to provide highly competitive loan products through its superior
capital market expertise and quality sources of capital. TMG works efficiently and effectively to get
the transaction closed and funded.
The Madison Group can be reached at 435-785-8350 or by
emailing Angela Kesselman at angela@madisongroupfunding.com.