Page 26 —
COLORADO REAL ESTATE JOURNAL
— June 1-June 14, 2016
Finance
by John Rebchook
Stephen Caragol’s The Edge at
City Park LLC bought land near
City Park in Denver a number of
years ago.
A year ago, the developer built
a five-story, 29-unit luxury apart-
ment building on the site at 1855
Gaylord St.
Steamboat Springs-based Cara-
gol, through The Edge at City Park
LLC, recently refinanced the con-
do-quality rental property in an $8
million recourse loan.
The loan was arranged by Cath-
erineMurphy of Chase.
The seven-year, fixed-rate loan
has an interest rate of 3.67 percent
and is amortized over 30 years.
It was by far the largest of a
handful of loans for a total of about
$19.5 million recently arranged by
Murphy.
“We chose Chase Bank because
they offered the best interest rate,”
Caragol said.
“We could also work with them
without a loan broker representing
us, so that saved us some money,”
he added.
In addition to the low costs, he
said he was pleased with the ser-
vice he received fromMurphy.
Since he wasn’t represented by
a broker, howdid he end up using
Chase andMurphy?
“Well, a couple of years ago, we
talked to Chase about doing the
construction financing,” he said.
“But they weren’t really buying
into our idea of larger units, as they
were more interested in financing
newbuildings with smaller units,”
Caragol said.
A typical unit in The Edge at
CityPark is about 1,390 square feet,
almost twice the size of a typical
unit inmany new buildings.
“It depends on the unit, but we
areprobablyaveragingabout $1.95
per square foot in rent,” he said.
“That is a lot lower than the
new construction market,” he
said, although the monthly rents
are similar to many of the newer
buildings with smaller units.
While Chase initially saw the
large units as a weakness, a year
after opening it saw the size as a
strength, he said.
“We don’t have asmuch compe-
tition for these units, so when we
went to refinance our loan, Chase
was very excited,” Caragol said.
Also, Chase was impressed by
the quality of the design and con-
struction.
The building was designed by
Eric Smith&Associates fromBoul-
der and it is managed by Corner-
stone.
“This is a really high-end prop-
erty,” Caragol said.
“They were really built in a
condo style even though they are
rentals,” he said.
“They are condo-quality,” he
said.
The units not only have high-
end finishes, but also the construc-
tion is so solid that the units are
basically soundproof.
“One guy plays his grand piano
in his apartment all of the time and
none of his neighbors can hear
him,” Caragol said.
Renters also are guaranteed
that their views will be preserved
because the development was
grandfathered under the previous
zoning that allowed five stories, he
said. A maximum of three stories
is now allowed in the immediate
area, he said.
He said if constructiondefect leg-
islation was reformed, “You could
turn these into condos instantly, if
youwanted to.”
However, the Chase financing
carries pretty hefty prepayment
penalties and it does not allow the
units to be converted into condos,
he said.
“Since you are not allowed to
convert them into condos, all you
can really do is refinance your
debt,” Caragol asid.
“But at some point, this entire
condo lawsuit mess will be passé
and, when that happens, small,
infill buildings like this one will be
great candidates to be turned into
condos. It’s too risky andexpensive
today, but that won’t always be the
case.”
Meanwhile, details of other
transactions recently arranged by
Murphy include:
• A $4 million recourse loan
with Brad Peterman to refinance a
50-unit apartment community at
7822-7952 Oberon Road inArvada.
The five-year, fixed-rate loanhas an
interest rate of 3.34 percent and is
amoritized over 30 years.
• A $2.94 million recourse loan
with Lakewood Apartments LLC
to refinance a 44-unit apartment
community at 9890-9892 W. 26th
Ave. in Lakewood. The seven-year,
fixed-rate loan at 3.76 percent is
amortized over 30 years.
• A $2.4 million recourse loan
with Lloyd’s Apartments LP for
the refinanceof a33-unit apartment
complex at 1360 Williams St. in
Denver. The seven-year, fixed-rate
loan at 3.61 percent is amortized
over 30 years.
• A $2.12 million recourse loan
with Hokkaido LLC for the refi-
nance of a 21-unit apartment com-
plex at 1760Pearl St. inDenver. The
three-year, fixed-rate loan at 2.99
percent is amortized over 30 years.
• A $1 million nonrecourse loan
withMcElroyLLCfor the refinance
a 19-unit apartment building at 967
Marion St. in Denver. The adjust-
able loan follows the 12-month
Treasury average indexwith a start
rate of 2.63 percent. This loan is
amortized over 15 years
• A $750,000 nonrecourse loan
with Freddy’s Family LLC for the
refinance of a 21-unit apartment
complex at 800 Ogden St. in Den-
ver. The five-year, fixed-rate loan
at 3.23 percent is amortized over
30 years.
• A $620,000 recourse loan with
Highland Vista LLC for the refi-
nance of a 12-unit apartment com-
plex at 3151-3165 Eliot St. in Den-
ver. The five-year, fixed-rate loan
at 3.61 percent is amortized over
30 years.
Other News
n
Montegra Capital Resources
Ltd.
recently funded a $1.86 mil-
lion loan for land in Cherry Creek
North.
The loanwasmade to a develop-
er who purchased four contiguous
parcels of land from three separate
sellers.
The developer plans to build 29
condos on the property.
There currently are single-family
homes and rental duplexes on the
property.
Montegra, a Denver-based pri-
vatemoneybridge lender,was able
to fund the loan in fewer than three
weeks.
n
Michael Salzman
and
Ed
Boxer
of
Essex Financial Group
recentlyarrangeda$7millionnon-
recourse loan for a 52,382-square-
foot retail property called Cerritos
Center, in Cerritos, California.
s
Shown is The Edge at City Park, a condo-quality apartment building.
