ORLANDO, FL – Pembrook Capital Management closed $20.5 million of financing for the acquisition of Silver Oaks Apartments, a 320-unit rental apartment complex for low and moderate income families located in Orlando, FL and for the renovation of 115 units at the property over the next two years.  The financing consists of a $17.0 million first mortgage bridge loan and a $3.5 million preferred equity investment.

“Pembrook specializes in customized financing to deliver the right capital stack for our borrowers,” said Stuart J. Boesky, CEO of Pembrook.  “In this case Pembrook was able to provide two layers of financing to help the sponsor buy this property and undertake improvements to add value.  Having discretionary capital allows us to structure complex financing solutions in the current lending environment in which other lenders are not in a position to provide flexibility or sufficient proceeds to support a business plot of this nature, which in part, includes providing quality affordable housing to families.”

Silver Oaks Apartments consists of 215 two-bedroom units and 105 one-bedroom units, comprising 306,298 rentable square feet in total.  The sponsor, an experienced investor with a substantial track record of acquiring and renovating undervalued properties, plans to improve the interiors of 115 apartments by replacing appliances, fixtures, flooring and carpeting, lighting and electrical, and applying new paint.  Other units have been updated previously.  Additionally, the renovation plot calls for exterior improvements to buildings, swimming pools, and club house.  The fitness center will be expanded and improved to provide more light and a view of the pool.

Terry Baydala, Managing Director, Originations, added, “We were able to close the loan and preferred equity investment within 30 days of signing the contract. The transaction had a very tight timeline as the developer had an expiring contract and significant deposit money at risk.  We believe the property has intrinsic value and potential; we came to that conclusion quickly.”

Pembrook is a real estate investment manager that provides financing throughout the capital structure, including first mortgages, mezzanine, bridge loans, note financings and preferred equity for most property types.  The firm recently announced it has originated or participated in investments totaling over $1 billion since its inception in 2007.

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CHANDLER, AZ – Security Properties bought Arches at Hidden Creek, a 432-unit multifamily property located in Chandler, AZ for $55 million.  Security Properties now own five assets in the Phoenix marketplace.

Arches at Hidden Creek is located within the dynamic Chandler submarket.  Chandler’s median annual household income is approximately $71,000, 32% higher than Maricopa County, which covers most of the Phoenix MSA.  Chandler’s greatest strength is its employment base.  Arches sits within five miles of 70,000 jobs in industries that include high-tech manufacturing, aerospace, bioscience, and advanced business services.  Because of the city’s central location and proximity to three freeways, it can pull from more than 1.7 million people within a 30-minute commute. The Price Road Corridor is the area’s largest and most established employment center. Silicon Desert, as it is known, is located just one mile southwest of Arches.

The property is also within close proximity to the ASU Research Park (15,000 jobs), Arizona Avenue Business Parks (20,000 jobs), Downtown Chandler (5,000 jobs) and the Chandler Airpark (5,000 jobs). Less than 3 miles directly to the west of Arches lies the Chandler Fashion Center, an upscale, super-regional mall that encompasses over 180 stores and roughly 1.2M SF. The mall is widely considered the premier shopping destination in metropolitan Phoenix’s Southeast Valley and is anchored by Nordstrom, Dillard’s, Macy’s and Sears.

Arches at Hidden Creek is a garden-style apartment community that was constructed in 1986.

The business plot is a moderate value-add. To date, 133 units have been upgraded throughout the property. Interior upgrades include: faux wood flooring, baseboards, black appliances, faux granite countertops, new cabinet fronts with hardware and painted cabinet boxes to match, light fixtures, two-tone paint, ceiling fans and updated hardware and plumbing fixtures. SP plans to continue this rehab strategy by renovating the remaining 299 original units to a similar interior scope.

According to Davis Vaughn, Director at Security Properties, the acquisition was made because, “Arches at Hidden Creek offers everything we look for in an investment.  The Chandler job tale is one of the best in all of Phoenix plus the location gives residents simple access to retail and enrollment in the top-rated Chandler school district.  With a basis well below replacement cost, we expect to produce outstanding risk-adjusted returns to our investors with this buy.”

The property will be managed by Security Properties-affiliate Madrona Ridge Residential.

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NEW YORK, NY – Mortgage rates were slightly higher this week, with the benchmark 30-year fixed mortgage rate nosing up to 3.64 percent, according to Bankrate.com’s weekly national survey. The 30-year fixed mortgage has an average of 0.23 discount and origination points.

The larger jumbo 30-year fixed climbed to of 3.62 percent, while the average 15-year fixed mortgage rate rose to 2.91 percent. Adjustable mortgage rates increased this week as well, with the 5-year ARM moving up to 3.13 percent and the 7-year ARM jumping to 3.32 percent.  

Concerns about whether or not central banks have reached their limits drove bond yields and mortgage rates higher this week, with the benchmark 30-year fixed rate erasing the entire post-Brexit decline and rising to 3.64 percent. Bond yields and mortgage rates alike were hit by worries of a potential Federal Reserve interest rate hike, a lack of additional stimulus by the European Central Bank, and the notion that the stimulus efforts at the Bank of Japan have hit a wall with not enough bonds available for them to buy.

Rates have been uncharacteristically low – with some saying markets have been distorted – because of the collective actions of central banks around the globe. If there’s no more stimulus to come, then there are fewer reasons for investors to buy and hold those assets the central banks have been buying. Mortgage rates are closely related to yields on long-term government bonds and market dynamics like this have a very strong influence on the movements of mortgage rates.

At the current average 30-year fixed mortgage rate of 3.56 percent, the monthly payment for a $200,000 loan is $913.79.

SURVEY RESULTS

30-year fixed: 3.64% — up from 3.56% last week (avg. points: 0.23)
15-year fixed: 2.91% — up from 2.87% last week (avg. points: 0.18)
5/1 ARM: 3.13% — up from 3.07% last week (avg. points: 0.25)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets.

For a full analysis of this week’s go in mortgage rates, go to www.Bankrate.com

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. The majority – 58 percent – expect mortgage rates will increase over the next week, while 17 percent predict a decline.  25 percent forecast that mortgage rates will remain more or less unchanged over the next seven days.

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