SR Realty Trust, Inc. Affiliate Purchases Warehouse District Loft Apartments for $3.25M
October 4, 2017
SRRT Lee, LLC, an affiliate of SR Realty Trust, Inc. announced today it has purchased Lee Lofts Apartments, a 24-unit multifamily complex in Minneapolis’ Warehouse District for $3.25 million. CBRE Capital Markets’ Debt & Structured Finance arranged $2.2 million in long-term acquisition financing for the property.
The buyer is an affiliate of SR Realty Trust, Inc., a private real estate investment trust managed and advised by Schafer Richardson, a fully integrated commercial real estate company that owns, operates and develops commercial properties in the Midwest. Lee Lofts was purchased from Harmony Lofts, LLC, a long-term owner through an UPREIT transaction.
“The Lee Lofts acquisition is representative of SR Realty Trust’s mission of helping individuals defer capital gains and depreciation recapture taxes,” said Jeff Merriam, a member of SR Realty Trust’s acquisition team. “In addition to fulfilling our mission, the acquisition fit our criteria of purchasing functional, well-located properties with the capacity to continuously increase net operating income.”
Ben Bastian, Joel Torborg and Mark Roos of CBRE’s Minneapolis office represented the borrower, SRRT Lee, LLC.
“CBRE’s Minneapolis financing team added a lot of value to the acquisition” stated Mr. Merriam. “The terms offered by Freddie Mac’s small balance loan program combined with the responsiveness and knowledge of CBRE’s financing team helped make for a successful addition to our portfolio.”
The financing was obtained through Freddie Mac’s Small Balance Loan Program and offers several attractive features: 10-year fixed interest rate in the low 4.00s, 65 percent loan-to-value, five years of interest-only payments, a 30-year amortization following the interest-only portion, non-recourse, low closing costs, and is fully assumable.
“SR Realty Trust, Inc. had three main loan requirements for this acquisition: offer a long-term fixed interest rate, be a non-recourse loan and have 5-years of interest only payments; the Freddie Mac Small Balance Loan Program was able to achieve all these items,” said Mr. Bastian, vice president.
Located in the warehouse district of downtown Minneapolis, Lee Lofts is in close proximity to the central business district, North Loop dining and entertainment, Target Field, the Mississippi River and a light rail station. The property features oversized loft-style units with 14-foot ceilings catering to the young professionals and empty nesters flocking to downtown.
Lee Lofts was originally built in 1906 and converted to loft-style apartments in the 1960’s. The seller of the property also completed a full renovation of the property in 2015, which includes new stainless-steel appliances, quartz island countertops, new lighting fixtures and new windows. The property has historically operated at or near full occupancy, and was 96% percent occupied at the time of closing.
Freddie Mac’s Small Balance Loan (SBL) program was established to specifically cater to loan sizes of $1 million to $7.5 million for properties with at least five apartment units. The Freddie Mac SBL Program offers a more borrower-friendly “bank-like” approach to underwriting and quoting deals. The process is considerably shorter than borrowers’ experience with the traditional Freddie Mac program. CBRE is one of eleven nationally-approved Freddie Mac seller/servicer lenders and the largest company with a local Minneapolis office. The firm is also the largest Freddie Mac seller/servicer since 2009 with total volume of more than $10 billion in 2016.
About SR Realty Trust, Inc.
SR Realty Trust, Inc. is a private real estate investment trust, or REIT, formed on September 15, 2014. The Company’s investment strategy is to acquire and maintain a diversified portfolio of income-producing commercial real estate assets. Our acquisitions focus on stability and consistency of income, disciplined and controlled growth, and transparency to investors. The Company maintains a long-term, buy-and-hold mentality and may also attempt to capitalize on short-term market considerations to maximize our investments. As of September 29, 2017, SR Realty Trust owns approximately $90M in assets. The portfolio is currently composed of assets in Minneapolis, MN, Rochester, MN, Duluth, MN, Omaha, NE, and Lincoln, NE. Please visit our website at https://srrealtytrust.com