Mack Provides $178M Loan for Philly Multifamily Portfolio Recap
Mack Real Estate Credit Strategies has provided Post Brothers with a $178 million loan for the recapitalization of Piazza at Schmidt’s Commons, an 11-building multifamily portfolio in the Northern Liberties neighborhood of Philadelphia, Commercial Observer can first report.
The loan has a three-year term with two one-year extension options. Ackman-Ziff negotiated the debt.
Post Brothers acquired Kushner Companies’ stake in the properties, which comprise 500 residential units above 127,000 square feet of ground level commercial space, facilitating Kushner’s exit from the portfolio and the Philly market, as reported by Bloomberg. Kushner Companies partnered with Oak Tree Capital Management to acquire the properties for $130 million in 2013, according to Philly Voice.
Located at 1001 North Second Street, Schmidt’s Commons first opened in 2009. Post Brothers, a multifamily investor with a specific focus on the Philly market, will use the financing to significantly improve the properties’ residential units and common areas, and to upgrade an 80,000-square-foot central plaza which hosts various events throughout the year.
“Mack was an exceptional lender to work with because of their responsiveness, competence and true understanding of the ‘big picture’ throughout this process,”Matt Pestronk, the president of Post Brothers, told CO. “Mack saw the embedded value in the portfolio, and could see the importance of flexibility in the perpetration of the business plan, which was truly invaluable to Post and its financial partners.”
“Post Brothers is very good at taking older properties, changing their amenity profile and upgrading the units for today’s renter,” Peter Sotoloff, the chief investment officer of Mack Real Estate Credit Strategies, told CO. “This transaction was text book in terms of including an undersupplied area in a market with good fundamentals, and a proven operator coming in and undertaking some much needed renovations. The property has fantastic bones and a great center courtyard and Post Brothers is really taking it to the next level.”
The Northern Liberties neighborhood, a major enclave for young professionals, sits northeast of Center City, Philadelphia’s central business district.
“We as an organization love the fundamentals in Philadelphia right now,” Sotoloff said. “We focus on eds and meds, so educational institutions and medical colleges, and that represents around 20 percent of the salaried jobs in Center City.” And Philly’s allure doesn’t end there. In addition to Comcast Corporation recently building its new $1.5 billion office headquarters in the city of brotherly love, “It’s home to 14 Fortune 500 companies, we love the millennial movement there and the supply is in check,” he said.
Speaking more generally of Mack’s appetite for multifamily lending opportunities, Sotoloff said: “I’d say we’ve been very pleased with the demand profile. We’re choosing markets where there is millennial growth, and also where there’s modest supply. Rent growth is starting to temper in certain areas given the new supply, but in the long term we’re very bullish. Multifamily is one of the most durable asset classes, and it has comprised a large portion of our lending portfolio as well as being the prime focus of our equity division.”