$45,000,000 Multifamily Community (148 Units) in Burbank, CA

The Deal

Commercial Lending Solutions recently closed a $45 million permanent financing for a 148-unit multifamily community in Burbank, California. The borrower, a fund affiliated with a publicly traded REIT, sought to refinance their stabilized Class B+ property with long-term fixed-rate debt to optimize their capital structure and lock in historically attractive rates.

The subject property sits in Burbank's coveted location near the Media District, benefiting from proximity to major entertainment industry employers including Disney, Warner Bros, and Netflix. At 95% occupancy, the asset demonstrated strong operational performance with consistent rent growth driven by the area's employment base and limited new supply.

The Challenge

While the asset quality and sponsorship were institutional-grade, the timing presented execution risks. The borrower faced a bridge loan maturity within 120 days, requiring certainty of execution rather than simply optimizing terms. Additionally, the loan size of $45 million fell into an awkward middle ground: too large for most balance sheet lenders seeking smaller multifamily loans, yet not large enough to generate significant fees for CMBS conduits focused on larger transactions.

Market conditions added complexity. Interest rates had moved meaningfully during the borrower's initial marketing period with another intermediary, forcing a restart of the process. The borrower needed competitive execution but couldn't afford delays or surprises that might jeopardize the timeline.

The property's vintage and recent capital improvements also required careful positioning. While the asset had been well-maintained and strategically upgraded, some lenders remained cautious about older multifamily properties without extensive recent renovations.

The Solution

We structured a comprehensive capital markets process targeting four distinct lending channels: Fannie Mae DUS, Freddie Mac SBL, two national life insurance companies, and a CMBS conduit. This approach ensured competitive tension while providing execution alternatives if any single source encountered underwriting issues.

Our positioning emphasized the property's irreplaceable location benefits and the stability of Burbank's employment base. Rather than competing solely on leverage, we highlighted the conservative basis and the borrower's long-term hold strategy, which aligned with lenders seeking stable, institutionally-managed assets.

For the GSEs, we leveraged relationships with top-tier DUS and SBL lenders who could provide efficient execution. The life companies were attracted to the credit quality and market fundamentals, while the CMBS conduit saw an opportunity for a clean, straightforward transaction that would enhance their pool composition.

We managed the process with aggressive timelines, coordinating site visits, appraisals, and due diligence across all four sources simultaneously. This parallel processing approach compressed the timeline while maintaining competitive dynamics throughout underwriting.

The Outcome

The process generated strong competition, with three of the four sources providing executable proposals. A national life company offered the most aggressive leverage at 70% LTV but at a meaningful rate premium. The CMBS conduit provided attractive pricing but required full recourse during the initial lease-up period, which didn't apply but created documentation complexity.

The Freddie Mac small balance loan ultimately provided the optimal combination of structure and execution: 15-year fixed-rate financing at 65% LTV with 30-year amortization and a five-year interest-only period. The non-recourse structure and streamlined documentation process aligned with the borrower's requirements.

Most significantly, the final spread represented the tightest execution we had seen on a multifamily transaction that quarter, reflecting both the asset quality and competitive tension generated through the process. The interest-only period provided near-term cash flow optimization while the 15-year term offered substantial interest rate protection.

The transaction closed within 75 days of application, well ahead of the bridge loan maturity. The borrower achieved their dual objectives of securing long-term fixed-rate debt while optimizing their cost of capital. The financing positions the asset for continued stable performance while providing flexibility for future strategic decisions.

This execution demonstrates the value of a disciplined capital markets approach, even for mid-market transactions. By creating genuine competition among appropriate lender types and leveraging strong fundamentals, we delivered institutional-quality execution for a sophisticated borrower in a challenging rate environment.