As part of a deal that’s being hailed as Southern California’s largest multifamily asset purchase in nearly two decades, Berkeley Point Capital has provided TruAmerica Multifamily and a group of investors with a $354m Fannie Mae credit facility to purchase a 14-property portfolio.
The mix of fixed and floating rate loans within the facility carry a blended interest rate of 2.59%. Fannie Mae credit facilities use a single pool of cross-collateralized and cross-defaulted mortgages as collateral for both long-term financing and short-term borrowing.
TruAmerica Multifamily — along with a syndicate of domestic and international institutional investors, including The Guardian Life Insurance Company of America and Allstate — acquired a 14-property multifamily portfolio for $482m, and the financing provides “tremendous financing flexibility across the existing portfolio and gives the investor group the capability to acquire additional assets,” according to an announcement.
“Assembling an attractive, value-add Class B multifamily portfolio of this size, particularly in Southern California, would take years if the assets were acquired individually,” said TruAmerica CEO Robert Hart, in a statement. “Having a demonstrated ability to execute on complex transactions, we were able to source this deal off-market with very well-capitalized institutional investment partners and take advantage of an exceptional and rare opportunity.”
The portfolio, acquired from Newport Beach, CA-based JH Real Estate Partners, totals 2,669 units, comprised largely of 1980s Class B apartment communities in Los Angeles County, San Diego County and the Inland Empire metropolitan area.
The portfolio fits into TruAmerica’s business plan to acquire and improve the operating performance of well-located mid-tier assets in primary Western US markets.
“Class B rents are expected to rise at least 5% across most Southern California market sectors this year,” Hart said. “While we intend to benefit from the expected rise in rental demand, it is TruAmerica and its partners’ mission to create affordable, well-amenitized housing for the American workforce.”
In addition to the value-add upside across the portfolio, TruAmerica said it will invest $40m for a repositioning that will include exterior/interior unit upgrades and community amenities.