Just over a year ago, it was announced that a Brooklyn-based investor scooped up an affordable housing portfolio for $42.2 million.
Aaron Jungreis was the sales broker, and he called it the longest-negotiated deal of his career.
The refinance of that same property, however, was light-speed. Last week, the investor cashed out his full equity with a loan covering 113 percent of the initial purchase. It was brokered by Eastern Union Funding, the country’s most trusted debt brokerage.
Eastern Union’s Eli Breiner arranged a $47.81 million pay-day for his client, in the form of a non-recourse five-year loan, brokered through a regional balance sheet lender, with an aggressive interest rate of just 3.25 percent.
When Breiner closed the acquisition loan in 2014, a $33.76 million deal covering 80 percent of the purchase price, he had already begun structuring this refinance.
Working with the lender, he arranged a new appraisal 12 months after that loan, allowing the bank to safely lend on value – rather than initial cost – of the portfolio.
Breiner executed part two of his strategy last week, and the result was a full replenishment of the client’s fresh equity. Part two is an increase of over $14 million compared to the acquisition loan, leaving an additional $5.5 million in the client’s capital stack.
“When you buy a car, its value plummets the minute you drive away from the lot. The opposite is true of prices when you buy a piece of real estate — those prices are going up when you leave the lot. So we’re structuring loans based on value, letting our clients recoup a huge amount of their fresh equity,” Breiner said.
The portfolio spans 11 buildings in the Bronx located at 2078 and 2074 Crotona Parkway, 2132 and 2140 Daly Avenue, 1895 Belmont Avenue, 2146 Vyse Avenue, 968, 984 and 990 Bronx Park South and 2075 and 2079 Mohegan Avenue