By Pat Jackson, President and CEO, Sabal Capital Partners
In April 2018, Sabal’s clients were acquiring a 96-unit apartment community in West Memphis, AK and encountered some financing hurdles. Though 97% occupied, the property was experiencing volatile collections and poor tenant credit underwriting. As a result, the asset did not qualify for financing under Freddie Mac’s Small Balance Loan Program.
Through some strategic maneuvering, Sabal was able to quickly deliver an interim and efficient solution. “We provided a flexible short-term, $2 million loan for the acquisition of the property,” said Richard Rennell, national production manager at Sabal. “This Bridge AFR loan was an ideal solution to our borrower’s problem, providing a 15-month term with two three-month extensions, which is our standard program.”
The borrower’s business plan called for the improvement and stabilization of property operations. He accomplished this by completing upgrades and hiring an experienced property management firm, which was able to replace the nonpaying tenants. Through the borrowers’ efforts, they were able to turn the property completely around in 12 months. Sabal was able to step in once again, refinancing the asset in April 2019 with a 10-year fixed rate loan of $2.95 million utilizing the Freddie Mac Small Balance Loan Program.
“The broker and I were in constant contact for the entire duration that improvements were made to the asset, which allowed us to step in immediately with a permanent loan when the time was right,” added Rennell. “This particular property is just one example of the diverse small balance programs we offer and how they can be combined for use on one asset.”
For more information on our AFR Bridge Program or any of Sabal’s additional Small Balance Loan Programs, please contact Sabal’s Multifamily Lending Experts at firstname.lastname@example.org.