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Debt & Equity

Complex cash arrangement closed by Walker & Dunlop

Walker & Dunlop, Inc. closed a $15,614,600 loan for the Retreat at Spring Creek, a multifamily apartment complex in Cleveland, Tennessee.

The loan was structured using the U.S. Department of Housing and Urban Development’s (HUD) Interest Rate Reduction (IRR) program.

The IRR program enables HUD borrowers to request a reduction of the interest rate on their existing HUD insured loan thereby improving the property’s cash flow.

Retreat at Spring Creek
Retreat at Spring Creek

Due to the current low interest rate environment, real estate assets can increase their debt service coverage as mitigation to future competitive issues and market conditions.

When using the IRR program, the loan continues amortizing down the original mortgage without impacting the unpaid principal balance.

The new loan, which will result in significant annual debt service savings, was a cash neutral transaction for the borrower in spite of a significant prepayment penalty and transaction costs.
Managing Directors, David Strange and Keith Melton led the Walker & Dunlop team.  Strange stated, “We are thrilled that TDK Companies (TDK), an experienced FHA developer, contractor, and owner of multifamily properties was able to take advantage of the current interest rate market and reposition The Retreat at Spring Creek to coincide with their long-term hold strategy.”

“The execution of the IRR loan was performed flawlessly by the Walker & Dunlop team. This refinance is the eighth refinance that Walker & Dunlop has handled for us over the past four years. TDK couldn’t be happier with our partnership with David Strange, Keith Melton, and the entire Walker & Dunlop team,” said Kent Ayer, president of TDK.

The Retreat at Spring Creek is a Class “A” market rate, multifamily, garden-style apartment complex built in 2011, including 199-units, and featuring 1-, 2-, and 3-bedroom apartments.

The apartment complex includes a gated entrance, a resort style saltwater swimming pool, outdoor kitchen and cooking station, volleyball court, a billiards room and a fitness center.

The property has maintained 100 percent occupancy due to the close proximity to Chattanooga, Tennessee and access to shopping, parks and restaurants from the on-site Greenway trail.

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