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TIC Multifamily Portfolio Gets $27M Loan

LOS ANGELES-Eleven buildings with 395 units in two counties are owned under complex tenancy-in-common structure. Borrowers wanted to replace floating rate with fixed.

By John McCloud | Updated on April 27, 2009

LOS ANGELES-The Los Angeles office of New York City-based Meridian Capital Group arranged $27 million in permanent financing for a 395-unit multifamily portfolio of 11 properties located primarily in Los Angeles County, with one property in Orange County. The non-recourse loan with Fannie Mae has a 5.6% fixed interest rate for 10 years.

The buildings are located in Inglewood, Buena Park, Garden Grove, Baldwin Park, Lawndale, Belleflower and Anaheim. Meridian managing director Alex J. Katz, who negotiated the loan with Meridian’s Shana Klisanin, characterizes the properties as “solid, Class B apartment complexes with a working-class tenant base.” He describes them as well maintained with stable tenancy rosters. The overall occupancy level is approximately 95%, and rents are in line with market rates for the individual submarkets.

According to Katz, the deal was unusually complex because the owners are a diverse collection of tenant-in-common buyers who have owned the properties for at least 10 years. “Given that underwriting criteria is getting tighter, many lenders have become exceedingly cautious about proceeding under the TIC structure,” he explains. “You basically have as your beneficial borrower any number of people without significant real estate experience. Where you would normally have a single go-to person for any guarantees, it becomes trickier who takes the liability on their shoulders.”

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