Tucker, Michael–Oct. 9 , 2014

Love Funding, Washington, D.C., secured $10.9 million through HUD’s 223(a)(7) program to refinance two market-rate Knoxville, Tenn. apartment properties.

Senior Director Tammy Tate of Love Funding’s Knoxville office secured the 35-year loans for Baco Realty Corp., which owns and manages Meadowood Apartments and Sutters Mill Apartments as well as assets in California and Nevada.

“We closed these loans in the mid-three percent range; they were in the high fours,” Tate said. “So they are going to generate something like $25,000 a year in cash flow savings.”

Tate said the program extended the loan term as well. “We had a lockout, but when you do an (a)(7) you can extend the term, and it also allows you to take the mortgage amount out to the original amount,” she said. “Any equity the borrower has can offset any legal costs or fees. In this case they had some equity, which lessened the cash required to close.”

Both Meadowood and Sutters Mill were originally insured using HUD’s 223(f) program and this marks the third time Tate helped the owners refinance the properties. Constructed in 1972, Sutters Mill Apartments includes 72 one-bedroom units, 128 two-bedroom units and 52 three-bedroom units in 21 buildings. Meadowood Apartments consists of 235 one- and two-bedroom units in 29 buildings.

“Right now the Knoxville submarket these properties are in has very low vacancy–something like 3.6 percent,” Tate said. “Any new supply coming in is being quickly absorbed.”

Source: MBA NewsLink