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Garden Apartments Secure $45M Financing

CENTRAL ISLIP, NY-PWF provides $44.9 million for two garden complexes in the suburbs of New York City. Both sites underwent extensive renovations that played a part in the refinancing efforts.

By Barbara Jarvie | Updated on August 04, 2004

CENTRAL ISLIP, NY-Mineola, NY-based PW Funding Inc, a subsidiary of CharterMac, provided $44.9 million in mortgage financing for two garden apartment complexes owned by Home Properties in the tight Long Island housing market. Hawthorne Court/Hawthorne Estates is a 434-unit complex here that consists of studio, one-, and two-bedroom and townhouse-style units. The second transaction involves Heritage Square Apartments, an 80-unit complex in East Meadow. Both the Hawthorne Court/Hawthorne Estates and Heritage Square loans were originated by PWF’s New Jersey office origination staff.

Gary Cohen, PWF regional vice president, tells GlobeSt.com that due to an extensive renovation program at both sites, Home Properties was able to realize more value. “They increased the value of the real estate and are realizing returns through increased rents.”

PWF structured the $38.4 financing on Hawthorne Court/Hawthorne Estates with Fannie Mae’s DUS discount mortgage-backed securities product. According to Neil Cullen, managing director and national sales manager of PWF, the benefit of DMBS is that it enables customers to benefit from the very low interest rates on the short end of the yield curve. “In the case of the Hawthorne financing, initial pay rate for the first 90-day security is in the low 2% range.” Subsequent DMBS securities will be sold every three months to set the pay rates and Home Properties elected to go with a 10-year loan term with 30-year amortization. The loan is also convertible to fixed-rate at any DMBS rollover date. Both the Hawthorne Court/Hawthorne Estates and Heritage Square Apartments loans were originated by PWF’s New Jersey office origination staff.

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