Capital One announced on Tuesday that it has provided Freddie Mac loans totaling $31 million for the acquisition of two Chattanooga apartment communities, the 200-unit Evergreen at Hickory Valley and the 238-unit Meridian at Hamilton Place.
The sponsor, Two Waters Capital, has invested $250 million in multifamily communities and currently owns seven properties consisting of 1,942 units in Texas and Georgia. Two Waters is a repeat Capital One and agency customer. Vincent Punzi, a vice president with Capital One Multifamily Finance, originated the transaction.
The 10-year fixed-rate loans have four years of interest-only payments, followed by amortization on a 30-year schedule.
“The transaction was complicated by a fire at Evergreen that damaged 10 units,” said Mr. Punzi. “Despite this, we were able to make allowances for the effects of the fire, which resulted in a lower spread and higher proceeds than anticipated at application.” Two Waters Capital’s decision to participate in Freddie Mac’s Green Advantage program also contributed to better pricing and larger proceeds.
Two Waters Capital has adopted a value-added strategy for these properties. Meridian at Hamilton Place was constructed in phases between 1978 and 1994 and was last renovated in 2012. Evergreen at Hickory Valley was built in 1974 and was also upgraded in 2012. Two Waters plans to focus on unit interiors, exteriors, community amenities, and site landscaping.
“Capital One’s ability to complete the deal despite the fire at Evergreen reflects its expertise as a longstanding multifamily lender and the relationship it has forged with Freddie Mac,” said Scott Williams, managing director of Aline Capital, the broker that arranged the financing. “Its determination to find a solution that would work for us highlights its determination to come through for its customers.”
Capital One Bank’s Commercial Real Estate Group offers a comprehensive array of financing solutions for property owners and developers nationwide, including balance sheet and agency lending.