LOS ANGELES-An institutional quality developer has secured $70 million for the cash-out refinance of Piero II Apartments, a 335-unit multifamily complex in Downtown Los Angeles. The funds will be used to pay for $65 million of construction debt.

The property owner sought interest-only financing with a floating rate and no interest derivative requirements, which is unusual. In the end, they were able to secure a non-recourse loan through an offshore bank at a LIBOR+155 with a five-year interest-only term.

“While floating rate loans usually carry lower interest rates than fixed and are generally available in the current market most borrowers are apprehensive to take on a loan without a fixed interest rate due to the risk of future payment increases,” says Gary M. Tenzer, principal and managing director at George Smith Partners, who secured the loan on behalf of the property owner.