LOS ANGELES, CA-Johnson Capital has arranged three loans worth $33 million for a trio of Westside multifamily projects. The non-recourse loans were provided by Freddie Mac.  

The non-recourse loans have a loan-to-value ratio of 75% and carry a fixed-rate for seven years.

Located in Brentwood and “Beverly Hills Adjacent,” the properties are high-end complexes completed in 2006 and 2007 at condominium-level construction standards. The owner is a Los Angeles-based family that was not identified.

Sherwin Aryeh, a manager in Johnson Capital’s Century City office who arranged the loans, praised Freddie Mac for what he described as the agency’s willingness to consider the owner’s advantages as both an owner and operator of several hundred  rental units in the same market.

Typically, Freddie Mac often assumes a certain level of management costs per unit, and considers those costs when determining the loan amount, according to Aryeh. A higher level of maintenance costs can often translate into a slightly smaller loan amount because the net income is slightly less. 

In this case, however, Aryeh says he was able to convince the giant lender that the owner was able to maintain the units at a slightly lower cost than the one Freddie Mac initially assumed, because the owner owns and operates several hundred units in the same area, and is able to maintain those properties more cost effectively than they could for a single building.

 “Freddie Mac took into consideration both the owner’s experience and their economies of scale in operating many units in the same market area,” he says.  As a result, the lender “gave the owner the benefit of the doubt and was willing to accept a lower estimate of operating expenses, and that meant a slightly higher loan amount,” he adds.

Aryeh says he bolstered his argument by pointing out to the lender that the rentals generated a high level of income, and had the potential in time to generate more.  

In this way, he says, “the owner was able to achieve a slightly higher loan amount” amount than Freddie Mac would usually provide for comparable properties.

Founded in 1987 and based in Irvine, Johnson Capital has arranged more than $30 billion in transaction volume.