$26,300,000 Multifamily Apartments, Jacksonville, FL

Overview

A $26,300,000 permanent takeout on a stabilized garden-style multifamily community in Jacksonville, Florida required more than competitive rate shopping. Florida's insurance market had fundamentally changed how agency and life company underwriters size proceeds on coastal deals, and Jacksonville's recent supply wave meant lenders weren't willing to underwrite to anything other than what the property had actually collected over the prior twelve months. Getting this loan closed meant solving an insurance documentation problem and a collections credibility problem at the same time, before a single term sheet could be trusted.

The Deal

The sponsor owned a stabilized garden-style multifamily community in the Jacksonville metro and was ready to transition off a construction or bridge facility into permanent debt. The objective was straightforward: non-recourse, long-term fixed-rate financing sized appropriately for a property performing well in one of the Southeast's strongest population-growth corridors. Jacksonville has posted consistent net in-migration numbers, and the sponsor intended to hold the asset for the long term, so assumability and rate-lock certainty mattered as much as the headline rate.

The loan request came in at $26,300,000. We ran it to agency execution through both Fannie Mae DUS and Freddie Mac Conventional channels simultaneously, and pulled a parallel quote from a national life insurance company to give the sponsor a genuine comparison across structure, prepayment flexibility, and pricing.

The Challenge

Two separate underwriting problems had to be addressed before proceeds could be finalized, and they were unrelated to each other except that both had to be resolved in parallel.

The first was insurance. Florida property and casualty premiums, particularly wind and flood coverage in coastal and near-coastal markets, have escalated significantly since 2022. This is no longer a footnote in the underwriting. Agency desks and life company credit teams are now stressing the insurance line with the same scrutiny they apply to rent growth assumptions. On a deal this size, a poorly documented insurance picture translates directly into a tighter debt service coverage ratio, which translates into fewer proceeds. The property carried wind mitigation features that qualified for meaningful premium credits, but those credits were not documented in a format that underwriters would accept without additional work. We had to pull the wind mitigation report, get it reviewed by the carrier, and restate the annual insurance expense in a format all three capital sources would accept before any of them would issue a final term sheet.

The second problem was the Jacksonville supply dynamic. The market absorbed a significant amount of new multifamily product over the prior two years, and every lender on this deal knew it. No one was willing to underwrite to pro forma rent assumptions or even to a current rent roll without verifying that collections were holding. The standard ask across all three execution channels was trailing twelve-month actual collections, and the debt yield calculation had to work at that number, not at a forward-looking stabilized figure. The property's collections supported the loan, but the documentation had to be organized and presented cleanly to keep underwriters from haircut-ing the income further on their own assumptions.

The Solution

On the insurance side, we coordinated directly between the property's insurance broker and each lender's underwriting team to get the wind mitigation credits properly documented and reflected in the underwritten expense load. The corrected annual insurance figure, supported by the formal mitigation report, brought the underwritten NOI to a level where proceeds were no longer constrained by the insurance line. We also structured adequate replacement reserves and insurance escrow requirements into the loan from the beginning, rather than letting lenders impose their own requirements late in the process as a condition to closing.

On the collections documentation, we built a trailing twelve-month rent and collections summary that mapped directly to the property's bank statements and management reports. We did not ask lenders to accept a current rent roll and annualize it. We gave them the actual receipts, organized by month, with occupancy and loss-to-lease clearly separated. That presentation gave underwriters confidence in the debt yield without requiring them to apply additional stress on their own.

After running all three quotes to final credit approval, the agency execution delivered the best combination of proceeds, rate, and structure for this sponsor's hold strategy.

The Outcome

The sponsor closed a $26,300,000 non-recourse permanent loan with a long-term fixed rate, full-term interest-only considered during sizing, standard amortization applied to final structure, and assumability built into the loan documents. Rate lock was confirmed prior to closing, which mattered given where rate volatility had been in the months leading up to the transaction. The loan fit the asset, fit the hold strategy, and reflected what the property had actually earned, not what someone hoped it might earn next year.