Dive Brief:
- Continental Properties has closed a $480 million refinancing deal for 10 multifamily communities across seven states in its Continental Properties Real Estate Development Fund II, LP, according to a press release shared with Multifamily Dive.
- The refinancing covers 2,731 units in Florida, Georgia, Illinois, Indiana, Iowa, Michigan and Tennessee, per the release. They are part of Development Fund II’s greater portfolio of 23 communities and more than 5,700 apartments.
- The move allows the firm to retire construction debt on the properties and return capital to investors, and supports its “long-term capital strategy amid a tighter lending environment,” according to Continental’s release. New York Life Investment Management provided the loan and Walker & Dunlop arranged it.
Dive Insight:
The refinancing was a “terrific deal,” Ed Madell, chief financial officer for Continental Properties, told Multifamily Dive.
The move enables the company to get capital back to its financial backers earlier, “and I think our investors appreciate that,” Madell said. “That is one of the focuses for Continental, trying to make sure that we're constantly recycling capital back to our investors, because they place a high degree of value on that today.”
Continental has been active this fall, closing its Development Fund IV with $203 million in capital commitments in October, according to a press release. The firm expects to develop 10 to 15 suburban multifamily communities under its Springs Apartments and Authentix Apartments brands with the funds and plans to invest the Fund IV capital by the end of 2027. The new projects will primarily be located in the Midwest, according to Madell.
“The Midwest is right now really the better area in which to develop. It’s been very stable as it relates to rent growth and cap rates,” Madell said.
The Menomonee Falls, Wisconsin-based firm also opened Springs at Aurora, a new 320-unit garden-style apartment community in Aurora, Illinois, on Wednesday, and broke ground on a 312-unit apartment project in the Pittsburgh area the previous week.
The debt world is very fluid right now, which facilitates development, according to Madell.
“Access to capital is very high. Lenders are very competitive in their spreads, so we've been able to do all of our construction financing without any headaches that we would have had in 2023, for example.”
Equity markets are much harder, according to Madell.
“Raising funds today is more difficult because of just general liquidity,” Madell said. “Whether it's in real estate or in private equity, people are not recycling deals at the speed at which they did in the past, so for all investors, liquidity is a concern.”
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