3650 REIT Provides $103M Mezzanine Loan for 3.7M-SF Apartment Portfolio
The joint venture project spans four states and is led by David Werner Real Estate Investments
By Brian Pascus May 30, 2023 9:34 am
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A multifamily portfolio comprising 3.7 million rentable square feet in the heart of the American South has recapitalized its existing equity structure, thanks to $103 million in mezzanine financing from 3650 REIT, a nationwide commercial real estate lender and loan servicing firm.
A joint-venture partnership among David Werner Real Estate Investments, a New Jersey-based real estate firm; Onyx Partners, a real estate investment firm led by Jeremy Rieder; and Carlton Associates, an investment firm led by David Cohen, received the mezzanine financing to recapitalize the Southern Residential Portfolio, a 12 asset portfolio with 3,500 apartment units across Tennessee, South Carolina, Georgia, and Louisiana.
Senior Managing Director Drew Anderman and Vice President Eddie Haber of Meridian Capital Group arranged the financing, while 3650 REIT’s Michael Fleischer originated and serviced the loan out of his firm’s Bridge and Event Driven (BED) lending platform, which specializes in short-term bridge loans and event-driven financing and primarily targets multifamily assets.
The $103 million mezzanine loan carries an initial term of 24 months.
Jonathan Roth, 3650 REIT’s co-founder and managing partner, described the deal as a transaction from a repeat borrower who has given 3650 REIT the opportunity to invest in “well-located assets” across the United States. Roth added that his firm “looks forward” to future transactions with the same joint-venture sponsor group.
“We are thrilled to complete another transaction for repeat borrowers with whom we have strong relationships, and believe the properties comprising the Southern Residential Portfolio will keep seeing great success,” Roth said in a statement. “This mezzanine financing … will enable the sponsors to achieve their desired financing goals by recapitalizing the existing equity structure of the diversified and historically well-occupied portfolio.”
Meridian’s Anderman and Haber echoed Roth and said they chose 3650 REIT due to the firm’s experience creating complex financing packages that accommodate tax structure requirements that simultaneously fit the existing senior lender’s loan conditions. They noted Meridian Capital Group has “a 20-plus-year relationship with the principals” at 3650 REIT, David Werner Investments and Onyx Partners.
“3650 and the sponsors share a common belief in the importance of long-term relationships and mutually beneficial capital solutions, which makes them the perfect partners for a complicated transaction like this,” Anderman and Haber said in a statement.
The mezzanine financing will pour into a project aimed at bolstering the supply of multifamily properties in the Sun Belt. The Southern Residential Portfolio is expected to add thousands of new units across four states; the one-, two-, and three-bedroom apartment units will have an average size of 1,020 square-feet and include modern finishes.
One-third of the units have recently been renovated and others are still undergoing renovations.
Brian Pascus can be reached at bpascus@commercialobserver.com
