Case Studies

12-Building Multifamily Portfolio, NYC


BESEN CAPITAL: 12-Building Multifamily Portfolio, NYC


Description: Besen Capital was retained as the exclusive mortgage broker for a twelve (12) building portfolio with 219 residential units and 10 stores located in Manhattan, Bronx and Brooklyn.  Each building in the portfolio had its own loan with extensive prepayment penalties and interest rates higher than the current market.  The first task at hand was to discuss the possibility of loan modifications with each lender.  We were able to modify some of the loans and with no additional loan proceeds required, this made the most economic sense as it reduced debt service between 15-20%.  The next step was to analyze what the savings would be if the interest rates on the remaining loans in the portfolio were refinanced for 100-150 bps lower which would reflect the current market and taking into account closing costs in order to determine whether this was financially feasible.  Our biggest challenge to overcome was the high prepayment penalties, which made it cost prohibitive.  Our solution was to approach each lender individually because as long as the loans were refinanced through them, we were able to negotiate substantially discounted prepayment penalties which made the refinancing financially plausible.  The substantially lower interest rates offered allowed us to secure additional loan proceeds to cover closing costs and to establish building reserves, while paying minimally more or less as the debt service before the refinance.  Value-add strategies implemented included:  mitigating interest rate risk by refinancing for a lower longer fixed rate term, and establishing reserves for building improvements to further improve the assets.