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2/08/18
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G.H. Palmer has just completed a cash-out refinance worth $233.6 mil on two of their downtown Los Angeles multifamily properties – the Medici and Orsini I. The 10-year, non-recourse loan closed at 4.02% and was sized at 60% of value, which would give the two assets a combined value near $390 mil.
Gary M. Tenzer with George Smith Partners arranged the financing, which consists of interest-only payments for the entire loan term.
The Medici features studio, one-, two-, and three-bedroom floor plans with luxurious interiors as well as a 24-hour doorman, complimentary tanning salon, a private one-acre park, a jogging track, two tennis courts, a putting green, golf driving cages, and several pools and spas. The property is located at 725 South Bixel St in Los Angeles.
Orsini I features studio, one, and two-bedroom apartments equipped with designer finishes, granite countertops, upgraded appliances, high ceilings, in-unit washers and dryers, large walk-in closets, and individual balconies or patios, many of which offer panoramic views of downtown Los Angeles. The property offers a host of on-site activities and amenities, including complimentary yoga classes, a regulation size indoor basketball court, a movie theatre, karaoke lounge, virtual bowling and golf, as well as a heated swimming pool and spa, private dry saunas and steam rooms, and a rooftop pool and spa overlooking skyline views. The property is located at 505 North Figueroa St, also in downtown L.A.
“The sponsor had existing debt on the portfolio, with two years remaining and pre-payment penalties in place, which would typically discourage an early refinance,” Tenzer noted. “However, by looking at the whole picture, it became clear that the long term savings of securing a 10-year fixed rate loan at today’s low interest rates outweighed the relatively minimal defeasance fees. The result was an exceptionally accretive transaction for our client.”
The borrower was able to reduce its interest rate by about one percent and generate net cash proceeds, making the transaction lucrative in both the short and long-term. Continued rate increases are a near-certainty, according to Tenzer, who expects to see rates increase 50 to 75 basis points in the next 12 to 24 months.
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