$260 Million Refinancing Secured for Multifamily Portfolio

Simpson Property Group landed a $260 million loan to refinance a portfolio of six apartment complexes, including two in Austin.

Multifamily mortgage company BWE originated the loan through Northwestern Mutual for Simpson Property Group, according to a news release from BWE. The portfolio includes more than 1,500 units. The five-year loan has an interest rate of 5.07 percent. It also has a 55 percent loan-to-value ratio, meaning the properties are worth about $473 million.

Simpson Property Group, which focuses on Class A multifamily properties, will direct some of the financing to two Austin properties: SkyHouse Austin and The Addison Apartments. The loan will also provide financing for Victory Flats in Beaverton, Oregon; The Encore Southpark in Charlotte; and Hartley Flats and Studio LoHi in Denver.

The properties are all less than 10 years old, and the portfolio has a vacancy rate of 5 percent.

“Knowing that this portfolio had pending maturities and that the market has been volatile, we began underwriting this deal early in the year so we could be proactive to changes in the market,” BWE’s Stephen Perricone said in the release.

SkyHouse Austin Apartments, at 51 Rainey Street in downtown Austin, is a 23-story building that has 320 units. It was built in 2014.

The Addison Apartments are a 388-unit property, at 2601 Esperanza Crossing in North Austin, just off of Loop 1. It was built in 2015.

September’s interest rate cut is expected to shake out refinancing opportunities for commercial loans approaching maturity, like the ones associated with these properties.

After their meteoric rise, Austin rent rates have fallen precipitously, creating challenges for the multifamily market, which is absorbing a historic supply of new units.

In a recent list of national submarkets posting the steepest rent drops, Austin took up nine of the 15 spots, according to Madera Residential’s Jay Parsons. Southeast Austin ranked first with a 12.8 percent drop in rents in the last 12 months.

Austin’s rent cuts “have everything to do with supply,” Parsons wrote.