Liberty Group Holdings Refinances 1222 St. Paul Street
February 29, 2016
Liberty Group Holdings has secured construction and cash out proceeds for the refinance of 1222 St. Paul Street in Baltimore. 1222 St. Paul is a five existing unit apartment building with spacious units with a mix of three 1 bedroom/1 bathroom units and two 2 bedroom/1 bathroom units. Each apartment features several amenities including dishwashers, washer/dryer combos and tall ceiling/window setups.
The proceeds from refinance will be used to retire the existing 5.25% five year mortgage, return capital to shareholders and finance the subdivision of Unit 1 into two luxury studio units. Unit 1 is currently an enormous (~900+ sf) one bedroom unit. The units in the building are so large that they are essentially inefficient on a price psf basis in their current configuration. By subdividing, we achieve additional units, income, rent roll granularity and property value.
The Property was originally purchased 80% vacant with one holdover, non-rent paying tenant in June 2014 for $442,500. Upon acquisition, the Sponsor embarked on a comprehensive renovation program including painting all units and common areas, gut renovating the kitchens and bathrooms on the two bedroom units and upgrading the plumbing and air conditioning systems of the building. The Property achieved 80% lease up in 90 days and reached 100% occupancy within six months generating a $6,770 monthly rent roll. The Property has maintained strong occupancy and market leading rents, achieving an "as-is" appraised value of $615,000 and $690,000 "as-complete," 39% and 55.9% increases from the original purchase price.
First Virginia Community Bank structured an 11 year fixed rate loan with 25 year amortization that will burn off to non-re-course upon achievement of certain LTV and DSCR covenants. The loan was sized to 65.2% LTV as-is and 69.6% as-complete.