CBRE Capital Markets Arranges Freddie Mac Refinance Loan for Affordable South St. Paul Rentals

CBRE Capital Markets’ Debt and Structured Finance Group arranged two refinance loans totaling $4,824,000 through the Freddie Mac Small Balance Loan (SBL) program for a pair of affordable rental properties in South St. Paul. 

Ben Bastian and Mark Roos in CBRE’s Minneapolis office secured the financing for the first-time Freddie Mac SBL borrower, DRS Investment VII, LLC. DRS Investment VII, LLC is an affiliated entity of Simek Realty, led by Doug Simek located in Edina, MN. 

Bastian and his team secured a $3.024 million loan for the refinance of the Clark Place Apartments, formerly known as Kaposia Terrace Apartments, a 48-unit garden-style apartment community at 1038 8th Avenue South in South St. Paul. The loan offers 25-year amortization and a fixed interest rate of 4.33 percent. 

The team also arranged a $1.8 million refinance loan for the Clark Place Townhomes, previously called Kaposia Terrace Townhomes, an adjacent 20-unit townhome-style apartment property at 1025 9th Avenue South in South Saint Paul. 

The Clark Place Apartments & Townhomes presented a challenge because of a Land Use Restriction Agreement (LURA) in place. It also fell under the Section 42 tax credit program with restricted rents through 2031, according to Mr. Bastian, Vice President, CBRE.
 
“Fortunately, the Freddie Mac SBL program was an ideal fit since the LURA was in its extended use period and our borrower was able to benefit from the 7-year fixed rates, 30-year amortization and non-recourse.”
 
Both properties are in the Low-Income Housing Tax Credit program with 100 percent of units set aside for households earning up to 60 percent of area median income. They function well together and have a shared playground, rental and management office.