Needham, MA - Potomac Realty Capital, LLC (“Potomac”), a full-service provider for bridge, mezzanine and permanent commercial real estate loans, structured and funded a $360 million loan for the refinance of a multifamily portfolio located in Maryland.  The borrower’s principal investor was Lubert-Adler Funds.  The portfolio consists of 10 properties with a total of 5,500 units. The loan was underwritten at 90% LTV with a 7 year term, interest only, carrying a fixed interest rate of 5.22% and includes a $20 million floating rate mezzanine loan. 

The genesis of the loan was Potomac’s diligence of the borrower’s holdings in multifamily real estate.  Potomac conceived of a value creation strategy whereby the borrower put two separate yet geographically similar portfolios together, in order to create an enhanced cash flow stream through more efficient revenue and expense management.  “Our company devised a way of providing maximum proceeds to the borrower inclusive of a mezzanine loan that contained a renovation reserve feature intended to provide for value enhancement improvements to the Properties.  By leveraging the efficiencies of the two portfolios together we were able to create a scenario of ‘1+1=3’,” said Dan Palmier, President & CEO of Potomac.  “We structured, underwrote and rate locked this complicated financing in approximately 30 days. The practice of successful real estate lending requires not only a sophisticated understanding of finance, but also a keen ability to see the vision of the borrower and then be creative in exceeding their expectations,” added Palmier.

The multifamily portfolio consists of a variety of garden and townhouse style apartment complexes located in various submarkets of Baltimore, Essex, and Hyattsville, Maryland.  The Properties have been extensively renovated in the past 12-24 months by the borrower, with interior, exterior and common area upgrades.  These upgrades have largely improved the marketability of the units resulting in a current average occupancy rate of 95% as well as strong rental rates.

Potomac customizes, creates and closes interim real estate transactions designed for visionary owners who value innovative financial solutions, strong relationships, and outstanding service.  Since it was formed in June of 2004, Potomac has originated over $500 million in commercial mortgage loans and expects to fund another $500 million in the balance of 2005.  Palmier, who has more than 20 years of experience in commercial real estate, formed Potomac to offer innovative financing solutions for various types of deals, including those that don’t meet strict underwriting guidelines.  “We look past the numbers to see the intrinsic value of the deal.  Always keeping our client’s needs in mind, together with our customers, we create value.” said Palmier.  Potomac is headquartered in Needham, MA, with offices in New York, Atlanta and Miami.