Grandbridge Originates $121M Financing on D.C.-Area Multi-Family Building

By Barbra Murray, Contributing Editor

Lending activity in the apartment sector is brisk, and Grandbridge Real Estate Capital continues to orchestrate deal after deal for borrowers. The commercial real estate finance firm originated a $121.1 million first-mortgage loan for the acquisition of The Buchanan, a 442-unit multi-family high-rise in Arlington, Va., just three miles outside of Washington, D.C.

A Class A property, the Buchanan first opened its doors to dwellers in 1971, occupying a 3.5-acre site at 320 23rd St. In addition to residences, the 13-story building features ground-level retail and office space. Dweck Properties purchased the asset for $175 million with the assistance of financing through Fannie Mae’s Delegated Underwriting and Servicing MBS loan product. Grandbridge originated the financing for the transaction in the form of a seven-year, fixed-rate mortgage with a 3.89 percent interest rate and a 30-year amortization.

It’s been a busy week for Grandbridge. In addition to the Buchanan deal, the firm closed three other loans totaling roughly $61 million.

If there is any property type that can reel in financing with relative ease in the current lending climate, it’s the apartment sector, and the metropolitan Washington, D.C. market is attracting its fair share.  Transactions announced over the last month include KeyBank Real Estate Capital’s closing of a $95 million Fannie Mae loan for Forest City Enterprises Inc.’s 549-unit luxury high-rise in Bethesda, Md.  Additionally, Beech Street Capital L.L.C. announced that it had provided an $18.9 million conventional loan for a repeat borrower’s purchase of a 180-residence property in Alexandria, Va., and Red Mortgage Capital L.L.C. revealed the funding of an approximately $41.2 million loan for a 250-unit asset in Fairfax, Va.

As noted in a first quarter report by commercial real estate services firm Cassidy Turley, financing options are on the rise. “Government-sponsored entities — or GSEs, such as Fannie Mae and Freddie Mac — remain the primary source of lending on stabilized rental properties. Banks have started to increase lending, which provide an alternative to their government-sponsored counterparts,” the report noted. It’s all about positive fundamentals. In the first quarter, the Washington, D.C.-area apartment vacancy rate dropped to 4 percent from the previous quarter, and rental rates climbed 1.5 percent.

Robust rental financing activity is hardly limited to Washington, D.C., or any major metropolitan market, for that matter. Secondary and tertiary locations are also attracting attention, as evidenced by Grandbridge’s aforementioned group of three recently completed transactions. Among the deals were a $23.5 million mortgage loan funded through American Real Estate Capital for a 371-unit residential property in Port Arthur, Tex., near Beaumont; an approximately $20 million first mortgage loan through Freddie Mac’s Capital Market Execution program for a 340-unit multi-family community in the suburban Milwaukee town of Waukesha, Wis.; and an FHA first mortgage of nearly $17.3 million for a 119-unit apartment community just outside of Minneapolis in St. Louis Park, Minn.