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March 02, 2018  

Deutsche Lands Big Loan on Apartments in SF

Deutsche Bank has won the mandate for a $550 million fixed-rate loan on the Gateway apartment complex in San Francisco.

Bank of America will also participate in the 10-year financing. Deutsche will fund about 80% of the balance, and BofA will kick in the rest. It’s unclear if the debt will be divided into senior and junior portions. The lenders will securitize all or most of it, probably via a single-borrower offering and one or more conduit deals.

The 1,254-unit complex is owned jointly by Oak Hill Investments of Menlo Park, Calif., CM Capital of Hong Kong and Prime Residential of Los Angeles. Eastdil Secured is their advisor.

The group will use about three-fifths of the proceeds to retire an existing $325 million Freddie Mac mortgage. Berkeley Point Capital of Bethesda, Md., originated that loan in 2013 and sold it to Freddie, which securitized it via two pooled offerings (FREMF 2013-K33 and 2013-K34).

The new mortgage will have a loan-to-value ratio of around 65%, which pegs the property’s value at around $850 million. That was the lowest leverage in the range of options considered by the Oak Hill team.

The complex, on a 7.75-acre site at 430 Davis Court in the Russian Hill/Embarcadero submarket, was 97% occupied at midyear 2017, according to a servicer report. It encompasses 12 apartment buildings ranging in size from two to 25 floors, plus 58 townhomes, 62,000 square feet of retail space and 916 parking spaces.

The property, originally called the Golden Gateway Center, was built in phases from 1965 to 1967. The Oak Hill team conducted an $11.4 million renovation in 2011.

Prime Residential is part of New York-based Prime Group, which also includes fund operator Prime Finance.