Columbia Pacific Advisors Lends $28M on Omaha Rental Community

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Seattle-based Columbia Pacific Advisors has provided $28.4 million in bridge financing to Vukota Capital Management (VCM) to refinance and recapitalize Legacy Crossing Apartments in Omaha, Neb., Commercial Observer has learned. 

The bridge loan retires existing debt and will recapitalize the property, allowing for VCM to undergo a value-add campaign to renovate the unit interiors and common areas, according to information from Columbia. The loan closed on Oct. 26. 

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While the exact terms of the deal could not be gleaned, sources said the short-term loan is fully interest-only and includes an extension option. 

Meridian Capital Group’s Jason Kahn, Seth Grossman and Sarah Kuebler — who are based out of Southern California — worked on behalf of VCM to source and arrange the financing. Columbia managing director of real estate lending Billy Meyer and senior vice president of originations Will Nelson funded the loan via the firm’s bridge lending division, a strategy which Meyer oversees. 

Kahn said in a statement that the borrower had “signed a term sheet in February as the existing bridge loan was nearing maturity. The dislocation caused by the pandemic coupled with nuances uncovered during the diligence process contributed to that loan being unable to fund. 

“We quickly took the deal back to market with a broader reach,” Kahn said, adding that Columbia was “comfortable with the strong sponsorship and their business plan. They not only refinanced the existing debt but will also be providing future funding to entirely renovate the asset, demonstrating their conviction in both the sponsorship and the property.”

Meyer said solid barriers to entry within Omaha’s multifamily market and the property’s general resilience amid COVID-19 drove their interest in the transaction.

“We were able to get comfortable with the opportunity as a whole, and all the pieces of the puzzle seemed to be in place: the asset and its location within the submarket; the product offering, with its amenities; the overall market vacancy and the impact [or lack thereof] of the ripple effect of COVID-19,” Meyer said. “[These], combined with the sponsor and the management company’s execution strategy and experience, were in line for success. In Omaha, the rent levels versus the cost of construction are not in line, which creates the barriers to entry.”

Built in 1979, the property includes 408 units across 17 three-story buildings and roughly 385,000 rentable square feet on a site at 10535 Ellison Plaza in northwest Omaha. The site is surrounded by retail and grocery offerings, as well as local schools and patches of park space.

“The Omaha multifamily market remains strong, and Legacy Crossing presents an attractive option for renters seeking high quality yet affordable homes in the area,” Nelson said in a statement.

Many of the residences have been recently renovated, but VCM will use this new financing to carry out a rehab campaign for most of the remaining units and common areas, as per information from Meridian and Columbia.

Meyer said that VCM is planning on deploying more than $4,500 per unit into rehabbing them and the common areas. He added that one highlight of the debt opportunity was that the property’s rent collections have remained quite high despite COVID-19, hovering in the high-90s percentile. VCM originally invested in the property in June 2018, as per its website. 

Pointing to the property’s strong performance post-COVID, Nelson said that it’s averaged “14 new leases or move-ins per month since March, and over 90 percent rent collection.”

Legacy’s one-, two-, and three-bedroom apartments include in-unit laundry, private balconies and patios, fireplaces and walk-in closets. Amenities at the site include a fitness center, a business center, a playground, a pool and a tennis court, as per the property’s website. Avantic Residential manages the property, according to Columbia. 

Monthly rents currently range from around $730 for one-bedrooms to nearly $1,200 for three-bedrooms, according to listing information from the property’s website and from Apartments.com.