The developers of Redbrook Apartments secured a $42 million loan amid massive appetite from lenders.
A recent deal from Colliers illustrates the appetite debt capital providers have for suburban multifamily assets amid the pandemic. The firm’s debt and equity team secured a $42 million loan on behalf of the owners, a joint venture between A.D. Makepeace Company and Campanelli, for Redbrook Apartments in Plymouth, Mass. The deal saw tremendous interest from lenders, according to the team, despite the challenging market conditions.
The joint venture development team began construction of the Redbrook Apartments in 2018, and completed the development over several phases with the final buildings coming to market in early 2020. The property was so popular, the developer completed stabilization by September, ahead of its initial schedule.
“Redbrook has outperformed expectations. The apartments have experienced continued rent growth and occupancy records, with the property being about 98% occupied right now, and with very little by way of concessions,” Jeff Black, EVP and co-lead at Colliers, tells GlobeSt.com. Black secured the funding on behalf of the borrower along with co-chairman Kevin Phelan and assistant VPs Sean Burke and Bryan Koop. Interestingly, out-of-state renters leased a large number of units sight unseen.
The strong interest in the property and rapid lease up made the property appealing to the debt community. Black says that there was “heavy competition from local banking to pursue this property and [he] entertained agency financing as well.” The same debt and equity team secured the original construction financing for the asset in 2018.
The apartment community has 184 units and is located in the 1,400-acre Redbrook master-planned development. The community will feature 1,200 single-family homes. The apartment community has won a Prism Award for Best Apartment Community, which also helped contribute to lender interest.
Housing has become an even more popular asset class for lenders and investors because it has generally held up during the pandemic. In a recent panel discussion for the GlobeSt.com Apartments conference Brendan Coleman, senior managing director, Walker & Dunlop, said his company sees at least 30 bidders for deals that come to market.
That sort of investor interest is pushing cap rates below 4% on some assets in the Sunbelt. “In some of those markets, particularly in the Sunbelt, we’ve seen rental increases,” said Trevor Koskovich, president of investment sales at NorthMarq. “We’ve seen pricing climb.”