(Mark Your Calendars: RealShare Apartments East, February 15th in Washington, DC)
ORANGE COUNTY, CA-Beech Street Capital has arranged $30 million in financing for the 272-unit Amberway Apartments. The financing is notable both for locking in a favorable rate for the borrower, while timing the closing in a way that minimizes the borrower’s prepayment penalty, according to Beech Street senior vice presidents Kristin Croxton and Gregory Reed.
Investor Patrick Cadigan, working with the real estate investment firm of Greenwood & McKenzie, sought a $30 million loan to refinance existing debt of $23.3 million. The prepayment penalty represented a substantial portion of the difference. The borrower was concerned that interest rates would rise if he delayed refinancing any further, according to the lender.
Beech Street suggested to the borrower that negotiations with lender Freddie Mac would be the best way to minimize the prepayment penalty. The federally chartered lender was able to provide an extended early “rate lock” at a competitive level, which allowed the borrower to lock into the favorable interest rate quickly. The loan closed 90 days later in November, reducing the prepayment penalty.
In December, Freddie Mac introduced a number of enhancements to its early rate-lock process to streamline the lending process further for borrowers in similar circumstances. These enhancements include a reduction in the amount of documentation that borrowers must submit as part of the preliminary underwriting package.
According to Beech Street, this change has the added benefit of shortening the review process for Freddie Mac. To further aid borrowers, the federal lender has adopted a policy of reaching a decision on rate-locks within two to five business days after receiving underwriting packages.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
