Originally purchased in April 2016, the seller, an Arizona-based family trust, wanted to take advantage of an appreciating market with improving property fundamentals and submarket conditions. Buyers, Ajai Sharma (Dallas) and Satnam Sanghera (San Francisco), were in search of multifamily assets that would fit their value-add business strategy for expansion into the Phoenix market. Indigo Lofts, which was partially renovated at time of sale, represented a good opportunity to purchase an asset at well-below replacement cost that would also benefit from additional capital improvements ultimately increasing cash-flow and overall value. Additionally, the property’s location in Mesa, metro Phoenix’s fastest growing community, and strong market fundamentals made this an attractive opportunity. However, faced with potentially rising interest rates, the buyer needed to act quickly in order to ensure the best lending terms and meet their return requirements.
The seller engaged the CBRE Capital Markets Investment Properties Multifamily team in Phoenix, recognizing the power of the CBRE platform and the team’s solid track record, including a career 97% sold-price to list-price ratio. Leveraging their market-leading expertise and deep investor pool, the Investment Properties team quickly identified the buyer as a good fit. Once the buyer had been selected, the CBRE Debt and Structured Finance team worked quickly to drive results for them from a lending standpoint with a Freddie Mac Small Balance Loan (SBL). CBRE’s dedicated SBL experts leveraged the platform to size the deal quickly and hold the quoted interest rate until rate lock right before closing. By hitting key benchmarks and submitting to Freddie Mac in a timely manner, CBRE was able to secure the financing at the initial quoted rate and terms. Additionally, CBRE Valuation was able to complete the appraisal within
two weeks and line up the necessary third-party reports needed to secure the loan prior to the buyer making a nonrefundable deposit.
Ultimately, CBRE arranged a $5.5 million, 4.75% fixed-rate, 10-year loan with three years of interest-only payments. Because CBRE was able to work seamlessly behind the scenes with combined efforts from Investment Sales, Debt & Structured Finance and Valuation teams, all deadlines were met, and the buyer was able to lock-in their initially quoted rate before closing. Hitting all loan-related deadlines proved to be crucial in loan execution and delivery, as market rates had risen by 35 bps at closing due to interest rate volatility. Additionally, the sale marked a 22% return on the seller’s initial investment leaving them well-positioned for their next investment opportunity.