Park Ridge & North Glen
$35,000,000 Bridge Loan & $16,100,000 JV Equity
Two apartment complexes totaling 792 units – both properties feature amenities such as pools, fitness centers, playgrounds, laundry rooms, and balconies or patios for most units. The two properties were a combined 20% vacant at closing, and in-place tenants were paying well below market rents. The previous owner had attempted to convert the properties to low income housing; as a result each property’s title included rent restrictions limiting the level of income a tenant could earn as well as the amount of rent the landlord could charge.
HRC has arranged $35 million in non-recourse acquisition bridge financing (66% of total cost) and $16.1 million in joint venture equity (90% of the project’s required equity). The interest rate on the initial funding was fixed at a spread over the 3-year treasury swap, allowing the Borrower to take advantage of the prevailing difference between swaps and LIBOR. Reserve accounts were established for capital improvement costs and loan interest; these reserves will be drawn at a floating rate based on LIBOR. The equity was structured as a subscription facility, which will allow the Sponsor to access additional equity from the same investor for future projects. The Borrower’s business plan was to remove the rent restrictions, complete a series of physical improvements, and increase the properties NOI over a 36-month period.