Case Study: Sunburst Apartments – Small Loans

Sunburst Apartments 
Case Study: MULTIFAMILY, Small Loans  

sunburst apartments case study

Property Info

Property Type: Multifamily, Small Loans
Date Closed: July 2021
City, State: Stockton, CA 
Lender: Freddie Mac SBL
Loan Amount: $2.8 million
Purpose: Refinance
Rate: 3.8%, 7 years

LTV: 65%

Property Objectives

Sunburst Apartments fills the critical supply of “workforce housing” that provides affordable rents and a safe environment for primarily lower income earners in Stockton. This property was purchased in 2017 and was fairly neglected and in need of a refresh. Berkadia’s challenge was to justify the large increase in value since purchase, by verifying the capital improvements and bottom-line NOI growth at the property, given the short ownership period. The goal was to give the borrower the confidence needed to continue to acquire and improve neglected assets, while also improving the tenants’ quality of life.

Berkadia Solution

Many Bay Area-focused bank lenders were still reluctant to lend in the Central Valley, despite very strong rent growth and historically low vacancy. The Freddie Mac SBL program has been a good fit for these under-banked tertiary markets, which contain a good amount of Class C workforce housing. Berkadia was able to get comfortable with a little higher leverage on the loan amount, which reimbursed the borrower for the out-of-pocket improvements made to the property. This in turn, gave the borrower the additional capital to purchase another asset, with the goal of updating and improving that property as well.  

Client Results

Since purchasing the subject in March 2017, the borrower has driven GPR from $21,000/month to $34,500/month as of 2021, a 64 percent increase in GPR. Renovations included exterior paint and landscaping, flooring replacement, new kitchen cabinets and an appliance package, new windows/patio doors, and a motorized carport gate for additional security for the tenants.

The Berkadia Advantage

Berkadia reached out to the borrower to make them aware of the new partnership between Freddie Mac and Esusu. We informed borrower of the benefit of a discount to the interest rate on their loan, in addition to the ongoing benefit to its tenants and the potential impact to its bottom line. Our borrower had a desire to further deepen their relationship with Freddie Mac and Berkadia and saw this as an opportunity to be an early adopter of the Esusu product by folding it into the in-house management arm. In addition to cost incentives, implementing Esusu assists in the property objective of maximizing NOI, supporting the borrower’s long-term goal of acquiring new assets and improving the quality of life for tenants.

Mortgage Banking

Managing Director

Berkadia Small Loans

Berkadia Small Loans offers Fannie Mae Small Loans and Freddie Mac Optigo® Small Balance Loans for multifamily loans up to $7.5 million. Comprised of dedicated management and mortgage banking professionals, the team’s intimate knowledge of Fannie Mae and Freddie Mac loan programs provides a seamless process and customized solutions. 

Learn more about Berkadia Small Loans.



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