MARINA DEL REY, CA—Legacy Partners Residential has secured a $96.4 million loan for the acquisition of Mariners Bay Apartments in Marina del Rey. In addition to the acquisition, the borrower plans to use the funds to redevelop the 379-unit property and its existing docks and waterfront promenade. The purchase price of the property was not disclosed.

“The debt was structured with a holdback to complete significant capital improvements that will allow the sponsor to extend the ground lease and offer tenants a high-quality place to live,” Brian Eisendrath, vice chairman of the capital markets debt and structured finance team at CBRE, tells GlobeSt.com. Eisendrath secured the funds on behalf of the borrower along with Brandon Smith of CBRE's Beverly Hills office.

Located at 14000 Palawan Way in Marina del Rey, the property is one of the largest apartment complexes in the area. It sits on 19 acres and has 409 boat slips through a land lease with the city. The city has approved Legacy's renovation plans, which include updating the docks, the promenade area and the landscaping, as well as the interior units and common areas. To accomplish these improvements, the borrower needed significant capital. “One of the biggest challenges was sourcing aggressive capital for a deal that had a capital improvement budget over $100,000 per unit,” says Eisendrath. “Additionally, lenders had to understand the ground lease structure for Marina Del Rey and get comfortable with an extensive marina component consisting of 409 boat slips. We had the benefit of working with a sponsor that had extensive experience with both ground leases and marinas, which helped lenders get comfortable with the deal complexities.” 

According to Eisendrath, this loan shows that financing deals are becoming more complex with a number of moving pieces. As a result, his team needs to take the time to educate lenders on the lender on property. “It took the lenders time to really understand the ground lease along with the scope of the renovation to the apartments and marina,” he says. “By going outside the box, they were able to lend on a truly irreplaceable piece of real estate.” 

It isn't only the complexities of deals that are increasing. The competitive capital in the market is encouraging lenders to raise their leverage and speed up their timelines. Earlier this month, GlobeSt.com reported that Quantum Capital secured a $33 million refinancing loan in 10 days. These stories are becoming more and more common as we move through the cycle.