LOS ANGELES—An entity controlled by Spruce Grove has secured a $30.8 million loan through Fannie Mae to refinance Villa La Paz, a 245-unit apartment community in Bellflower, CA. The loan has a fixed interest rate and was used to refinance debt that is maturing in mid-2016.

“This is a legacy asset for the borrower,” Chuck Christensen, SVP at Capital One Multifamily, tells GlobeSt.com. “The borrower wanted to take advantage of the current low rate environment and go out beyond 10 years with the new debt.  They have always secured 10-year debt in the past, but in this instance 15-year debt worked perfectly for the borrower.  We are seeing more borrowers taking advantage of the current interest rate environment to secure longer term debt than they have traditionally used in the past.” Christensen secured the funds on behalf of the borrower.

With interest rates expected to rise this year, the borrower was looking to refinance now to lock in a lower rate. According to Christensen, after running the numbers with prepayment penalties to cash out early, it still made sense to take advantage of the lower interest rates before a potential rise later this year. They structured the loan with three years of interest-only payments so that the property's cash flow remained unchanged.

The property was originally built in 1979 and is in excellent condition. It features two fitness centers, three pools, a clubhouse and five barbecue areas, and is located within close proximity to retail and dining options.

We have also seen a lot of borrowers looking to lock in interest rates early, either at the start of application or through rate-lock programs. This is also due to fear that interest rates will rise soon. As a result, many borrowers are hustling to secure funds and rates early to avoid higher rates in the coming months.