Oceanside CA— Capital One announced on Wednesday that it has provided a $49.8 million Freddie Mac fixed-rate loan to refinance Riverview Springs, a 358-unit apartment community, 4398 Rainier Way in Oceanside, California, a city in the San Diego MSA. Chuck Christensen, Senior Vice President in Capital One Multifamily Finance’s office in Newport Beach, California, originated the transaction.
The sponsors, Spruce Grove, Inc., are repeat Freddie Mac borrowers and have an existing Freddie Mac loan through Capital One. Spruce Grove is a privately held, diversified real estate company that has built and managed more than 4,500 apartment units, 200,000 square feet of office space, and one million square feet of retail shopping space.
The 10-year, interest-only loan has standard defeasance prepayment.
Built by Spruce Grove in 1990, Riverview Springs has one, two, and three-bedroom units on more than 23 acres. “The sponsors have room to build almost 50 new townhouses on the property, but the terms of their previous loan precluded this possibility,” Christensen said. “They came to us to see if we could devise a solution. For a number of reasons, the standard approach—removing the developable parcel from the property and using existing apartments as collateral for the new construction—was not feasible.”
Working with counterparts at Freddie Mac, Christensen’s team crafted a solution based on an expansion rider to the loan documents that will allow the units to be built. The sponsors will use proceeds from the transaction to finance the new construction.
Capital One also urged the sponsors to apply for Freddie Mac’s Green Up Program, which makes it possible for borrowers to receive better pricing and more funding when they agree to reduce energy or water consumption by at least 15 percent. In this case, the sponsors received a substantial reduction in their interest rate. To achieve energy savings, they will switch to LED exterior lighting and replace kitchen and bathroom faucets, showerheads, and washing machines to reduce water consumption.
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. Additional information can be found at www.capitalonemultifamily.com.