The Hawthorne Inn Owners Secure Nearly $2M in Financing

SAN DIEGO-Robert Moses and Jitka De Jour of Bonita have refinanced their Hawthorne Inn apartment complex in San Diego with a $1.7-million loan provided by locally based Imperial Capital Bank. Located on a 10,001-sf parcel at 2121 First Ave. in the Banker’s Hill area of San Diego, the Hawthorne Inn was constructed in 1920 and underwent a significant renovation in 2002. It is a four-story, wood-frame and painted wood siding building that encompasses a total of 11,951 sf and houses 31 studio apartment units. As an SRO asset, “it essentially provides affordable housing in San Diego,” according to Leo Morales of the San Diego office of Imperial Capital Bank, who handled the recent loan transaction. His firm has provided loans for a number of SRO properties in San Diego, Los Angeles and San Francisco, Morales tells GlobeSt.com. The borrowers in the Hawthorne Inn deal decided to refinance their asset, as a means to buy out one partner and take out the first-trust deed. “We were able to lower the interest rate on their first-trust deed, as well as provide cash proceeds to buy out a partner,” Morales tells GlobeSt.com. The Hawthorne Inn transaction, which involved a 61% loan-to-value, is “a good example of the low cap rates that have accepted values here in San Diego,” Morales says. “The gross income multipliers have been exceedingly high and the cap rates have been low, which affect the value, so debt-service ratios are always an issue when securing loan amounts,” he points out. “That’s why you see a great disparity,” Morales says, explaining that his company usually provides up to a 75% loan-to-value. In this case, Imperial Capital Bank provided a 61% loan-to-value based on the required debt coverage ratio for the property, Morales tells GlobeSt.com.