This week, CRED iQ reviewed the commercial real estate lending landscape and highlighted multifamily properties that have secured financing in the past 2 months. The highlighted loan originations featured 4 properties within the New York-Northern NJ MSA as well as a property located in the highly sought-after Sun Belt market of Raleigh, NC. In certain cases, mortgage loans from properties’ prior financing packages were catalogued in CRED iQ’s database, which enables users to evaluate prior loans terms and pre-origination financial history.
Using CRED iQ’s proprietary Commercial Real Estate Comp scoring functionality, we compared CMBS lender terms and loan structures for newly originated loans to ascertain trends in the commercial real estate lending environment. Additionally, we provide valuations for each asset to evaluate leverage levels in relation to originators’ LTVs. The CRED iQ valuations factor in a base-case (Most Likely), a downside (significant loss of tenants), and dark scenarios (100% vacant). Base-case valuations for select properties are provided below. For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
310 units, Mid-Rise Multifamily, Harrison, NJ
Ironstate Development secured $90 million in mortgage debt from Deutsche Bank on November 23, 2021 in the form of a $43 million first mortgage and a $47 million subordinate loan to refinance existing debt on The Eddy multifamily complex. The loan was structured with a 10-year term and an initial 5-year interest-only period. The weighted average interest rate for the financing package was 2.89% — consisting of 2.45% for the senior debt and 3.29% for the junior debt. The loan will be locked out from prepayment for 3 years, and then require a yield maintenance charge for prepayment until its open period 3 months prior to maturity in December 2031. Many of CRED iQ’s loan comparisons are secured by properties located across the Passaic River in Newark, NJ; however, one of the more relevant comps is the $97 million mortgage, originated in June 2018, that is secured by the Harrison Urby Apartments. The loan had an interest rate of 2.04% with a 5-year interest-only period.
The Eddy’s mortgage debt is secured by fee interest in a 310-unit mid-rise multifamily property in Harrison, NJ. The property was developed in 2021 and comprises studios, 1-bedroom, and 2-bedroom unit types. The property leased up quickly after coming online in February 2021 and was 98% occupied as of November 2021. The development of the property included a Payment in Lieu of Taxes (PILOT) agreement that is effectively a temporary tax abatement.
The property was appraised at a value of $140.1 million, equal to $451,935/unit, as of October 13, 2021, which implied a whole-loan LTV of 64% and a capitalization rate of 4.38% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
|Address||555 South 1st Street|
Harrison, NJ 07029
|Property Subtype||Mid Rise|
|Building Size||310 units|
|MSA||New York-Northern New Jersey-Long Island, NY-NJ-PA MSA|
|Appraised Value||$140,100,000 ($451,935/unit)|
|CRED iQ Base-Case Value||$138,400,000 ($446,444/unit)|
Arbor Creek Apartment Homes
347 units, Garden-Style Multifamily, Raleigh, NC
Bellwether Enterprise originated a $35.6 million mortgage on October 26, 2021 to refinance existing debt on a multifamily property in Raleigh, NC. The floating-rate loan had a 10-year term, a 5-year interest-only period, and was indexed to 30-day SOFR plus 2.40%. The loan will be locked out from prepayment for 1 year and will require a prepayment penalty of 1% until its open period beings 4 months prior to maturity. For those looking for origination opportunities in the Sun Belt, one of CRED iQ’s most relevant comps in a $24.4 million loan secured by The Retreat at Raleigh — a 554-unit multifamily property located less than a mile away from Arbor Creek Apartment Homes. The comparable loan has a maturity date on January 1, 2023 but will be open for prepayment on September 1, 2022.
The Arbor Creek Apartment Homes loan is secured by a 347-unit affordable housing property located west of the Raleigh, NC CBD. All but 10 of the units offer rents at less than or equal to 80% of Area Median Income (AMI). There are 132 units, equal to 38% of total units, that are rented at less than or equal to 50% AMI. The apartments were 95% occupied as of August 2021. The property was appraised for $54.3 million, equal to $156,484/unit, as of August 5, 2021, which results in an LTV of 65.6% and an implied cap rate of 4.11% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
|Name||Arbor Creek Apartment Homes|
|Address||5400 Portree Place|
Raleigh, NC 27606
|MSA||Raleigh-Cary, NC MSA|
|Interest Rate||30-Day Avg SOFR In Advance + 2.40%|
|Appraised Value||$54,300,000 ($156,484/unit)|
|CRED iQ Base-Case Value||$51,440,000 ($148,251/unit)|
New Floral Gardens (II and IB)
260 units, Multifamily, North Bergen, NJ
NorthMarq originated two loans totaling $34 million on November 1, 2020 to refinance $15.8 million in existing debt on 260 affordable housing units in North Bergen, NJ. The two loans each have an interest rate of 2.88% and are structured with 10-year terms and 30-year amortization schedules. The loans will be locked out from prepayment for 2 years, and defeasance will be permitted after lockout through the remainder of the loan term. Both loans will be open for prepayment four months prior to maturity. CRED iQ’s highest scoring loan comp is the $47.55 million Hudson Mews loan, which was originated on December 9, 2020 and has an interest rate of 2.39%. Hudson Mews is a 198-unit multifamily property located approximately a half mile away from the New Floral Gardens properties.
New Floral Gardens consists of two properties — building IB contains 145 units and building II contains 115 units. The properties are located within the Hudson Waterfront of northern New Jersey with immediate access to the Lincoln Tunnel. Occupancy at both properties has been stable since 2012 and was most recently greater than 95% as of September 2021. Over 80% of the units offer rents less than or equal to 50% of Area Median Income (AMI).
The New Floral Gardens IB property had the higher appraised value of the two, equal to $37.3 million, or $257,310/unit. The New Floral Gardens II property was appraised for a value of $19.8 million, or $172,087/unit. For the full valuation reports and loan-level details, click here.
|Name||New Floral Gardens IB||New Floral Gardens II|
|Address||1200-1220 26th Street|
North Bergen, NJ 07047
|2625 Kennedy Boulevard|
North Bergen, NJ 07047
|Property Subtype||High Rise||High Rise|
|Submarket||Hudson Waterfront||Hudson Waterfront|
|MSA||New York-Northern New Jersey-Long Island, NY-NJ-PA MSA||New York-Northern New Jersey-Long Island, NY-NJ-PA MSA|
|Appraised Value||$37,310,000 ($257,310/unit)||$19,790,000 ($172,087/unit)|
|CRED iQ Base-Case Value||$35,420,000 ($244,276/unit)||$19,360,000 ($168,373/unit)|
Forest Hills South Co-Op
605 units, Cooperative Housing, Forest Hills, NY
A $16.9 million mortgage was originated by National Cooperative Bank on November 18, 2021 to refinance existing debt on a cooperative housing property in central Queens, NY. The 10-year loan was structured with a 30-year amortization period and an interest rate of 2.85%. The loan would require a yield maintenance charge for prepayment for most of its term until prepayment provisions ease up to a 1% penalty, starting 7 months prior to maturity. One of CRED iQ’s highest scoring loan comps is a $17 million loan secured by the Hampton Court CoOp in the Kew Gardens neighborhood of Queens. The comparable loan was originated in December 2019 and had an interest rate of 2.92%. Hampton Court contained 323 units across 4 buildings.
The Forest Hills cooperative housing property spans 7 buildings along 113th Street in the Forest Hills neighborhood of Queens. Three of the buildings have frontage along Queens Boulevard. Of the 605 units, 584 units are owned by tenant-shareholders and 21 units owned by the loan sponsor or cooperative. Additionally, there are 18 commercial units that function primarily as ground-floor retail.
The property was appraised at a value of $253 million ($418,182/unit) as of September 23, 2021, which aligns with CRED iQ’s analysis of over 40 sales transactions of units at the property in 2021. CRED iQ’s average sales price was equal to $421,451/unit or $255 million. However, CRED iQ’s Base-Case valuation of $173.7 million, equal to $287,056/unit), is based on the scenario of the property operating as traditional multifamily. For the full valuation report and loan-level details, click here.
|Name||Forest Hills South Owners, Inc.|
|Address||77-15 113th Street|
Queens, NY 11375
|Property Subtype||Cooperative Housing|
|Building Size||605 units|
|MSA||New York-Northern New Jersey-Long Island, NY-NJ-PA MSA|
|Appraised Value||$253,000,000 ($418,182/unit)|
|CRED iQ Base-Case Value||$173,700,000 ($287,056/unit)|
Coolidge Hill Road Apartments
28 units, Low-Rise Multifamily, Watertown, MA
A $4 million loan was originated by Bank of America on November 19, 2021 to refinance existing debt on a 28-unit multifamily property in Watertown, MA. The interest-only loan has a 10-year term and an interest rate of 3.77%. The loan will be locked out from prepayment for 2 years, and defeasance will be permitted after lockout through the remainder of the loan term. One of CRED iQ’s highest rated comps for this new origination is a $9.4 million loan that is secured by Homer Apartments — a 58-unit multifamily property located in Cambridge, MA. This comparable loan was originated on December 31, 2020 and had an interest rate of 2.92%.
Coolidge Hill Road Apartments consists of two buildings — a 24-unit, 3-story building known as Coolidge Hill Manor and an adjacent quadplex. The property was 100% occupied as of October 26, 2021 and was appraised for a value of $7.1 million ($253,571/unit). The appraisal value resulted in an LTV of 56.5% and an implied cap rate of 4.54%. For the full valuation report and loan-level details, click here.
|Name||Coolidge Hill Apartments|
|Address||39 Coolidge Hill Road|
Watertown, MA 02472
|Property Subtype||Low Rise|
|Building Size||28 units|
|MSA||Boston-Cambridge-Quincy, MA-NH MSA|
|Appraised Value||$7,100,000 ($253,571/unit)|
|CRED iQ Base-Case Value||$6,067,000 ($216,691/unit)|
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About CRED iQ
CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers to CRED iQ use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities. Our data platform is powered by over $2.0 trillion of CMBS, CRE CLO, SBLL, Ginnie Mae, FHA/HUD, and Agency loan and property data.