In today’s real estate market, having top flight property in a prime location is not enough. In order to truly make maximize an investment, an owner has to take every opportunity to refinance with competitive terms.
Having an advantageous financial position enables the property owner to attract the best tenants and to finance renovations when needed. In order to make such moves, having a strong borrowing profile is essential. If this is the case, lenders will offer extremely favorable terms.
A recent globest.com story highlights this trend. AvalonBay recently secured a $185 million loan to refinance a portfolio that included three multifamily properties. AvalonBay shopped the opportunity to several lenders, and was not certain of whether multiple lenders would fund the deal, but when New York Life offered such competitive terms, it became clear that a single lender would be the most profitable choice.
While the actual rate was not publicly disclosed, the loan was for a 10 year period, fixed rate with full-term interest only. Paying on an interest only loan will likely maximize AvalonBay’s cash flow over this period, which would create a great deal of flexibility for future deals. It also shows that the market for refinancing properties is particularly strong for those with good credit profiles or high-demand properties.
Even in a good market, real estate investors must consider multiple offerings and be adept at negotiating terms. A skilled real estate attorney can advise clients on how particular deals could affect their positions in the future and protect their legal rights in the present.