$68MM Multifamily Acquisition | Virginia Beach, VA

Placed fixed-rate permanent loan and preferred equity to acquire a value add 287-unit apartment complex in Virginia Beach, VA.


A steadily rising interest rate environment and volatile end-of-year reinsurance market threatened to impact underwriting metrics prior to closing. A reduction in senior loan proceeds necessitated the integration of preferred equity into the capital stack. An inverted yield curve made short-term floating rate unattractive, and an alternative solution was needed. Furthermore, the timing to close was delayed so that the property could achieve the requisite occupancy numbers.

$68MM Multifamily Acquisition | Virginia Beach, VA


Eyzenberg & Company advised the client to pursue a fixed rate option to remove future rate volatility,
avoid the cost of hedging and make securing a preferred equity investor easier. Agency lenders were
specifically targeted due to their unique ability to provide supplemental funding at future dates which
could be used to repay the preferred equity in a recapitalization or lever up for a potential buyer. Since
the property had not yet achieved the requisite occupancy a Freddie Mac option was chosen due to its
ability to rate lock the loan earlier in the process.

Although the aggregate amount of preferred equity capital was restricted by the lender’s DSCR
requirement, the preferred equity provider agreed to reduce the current soft pay below their typical
requirements to allow for greater proceeds to fill the funding gap.

Eyzenberg & Company approached a national owner/manager who agreed to provide third party
property management services in exchange for putting the property under their insurance umbrella
policy, thereby reducing costs by almost 60% thereby keeping anticipated senior loan proceeds flat.

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