It was a tricky deal.
Meridian Capital Group negotiated an $83 million Freddie Mac loan from Capital One Multifamily Finance for the acquisition of a garden-style multifamily property in Annapolis, Md., with a few kinks to be worked out.
The new owner, New York-based Castle Lanterra Properties, purchased the 608-unit Watergate Village from Columbia Realty Venture, based in Washington, D.C., for $105 million, in a sale brokered by CBRE. The seller had owned the property for more than 40 years.
The seven-year acquisition loan from Capital One carries a floating interest rate priced at 200 basis points over 30-day Libor with three years of interest-only payments followed by a 30-year amortization schedule.
The rental community contains seven five-story buildings and 13 two- and three-story buildings, as well as a swimming pool, tennis and basketball courts, outdoor picnic and barbeque space, and a crabbing and fishing dock, among other amenities. Yet, not all is picture perfect.
“The financing of the purchase in particular had many unique challenges, such as an unusual boat dock income, fallout from a neighboring environmental concern, zoning requirements and closing during a harsh winter,” said Meridian Senior Vice President Barry Lefkowitz, who negotiated the debt deal alongside Managing Director David Cohen.
Additionally, the property contains a 45-unit building that is currently unusable due to a recent fire. The borrowers plan to renovate the offline building, as part of a broader capital improvement plan “geared toward enhancing the tenant experience, while increasing cash flow and property value,” the broker noted.
“With a great amount of teamwork with the excellent team at Capital One, the professional borrowing group at Castle Lanterra, and the help of the seller, we worked through all the issues to bring the loan to a successful and timely closing,” Mr. Lefkowitz said.