Chateau Toluca Apartments

110-unit apartment property located in Burbank, California

Property Description: 110-unit, Class B+ multifamily project located adjacent to Toluca Lake in Burbank, California. The property is well located in an in-fill market and was 96% occupied at closing but was in need of a renovation and had substantially below market rents as a result.

Investment Profile: The Sponsor’s business plan was to make capital improvements, raise rents to market and then sell the project to an institutional investor. The going-in capitalization rate was sub- 5% but the Sponsor believed that it could raise rents on a post-renovation basis to have an attractive basis in the asset.

Loan Amount: $16,781,000

Loan Type: Acquisition and reposition first mortgage bridge loan

Deal Highlights: The Sponsor group was a comprised of an operating partner and a pension fund, and because a portion of the units were corporate housing the pension fund needed to structure its investment as mezzanine debt. Mesa West Capital provided a loan to the Sponsor with an acceptable intercreditor agreement with the pension fund notwithstanding that the borrowing entity had approximately a 1% equity investment and the remainder was in the form of debt on the property.

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