Gortikov Capital has tapped Ready Capital to back a $141.4 million financing package to recapitalize the Samo Apartments portfolio, an 11-property multifamily asset cluster in the advisory’s headquarter city of Santa Monica, California.
The boutique commercial real estate brokerage and advisory outlined the 11-property, 399-unit affordable multifamily deal on October 7 and will be supplying a $13.8 million preferred equity investment alongside the New York-based real estate financier’s $127.6 million senior loan to round out the deal’s financing.
The recapitalization package for the Samo Apartments portfolio consists of a two-year, floating rate senior bridge loan from Ready Capital and Gortikov’s preferred equity component, both provided to WS Communities.
“While working on the Samo Apartments Portfolio we experienced a variety of obstacles that under normal circumstances may have proven insurmountable,” said Bryan Gortikov, president of Gortikov Capital. “Rising short-term rates impacted hedging costs, rising long-term rates impacted our underwriting and general economic uncertainty sent many competitive capital sources to the sidelines.”
He noted the strength of the sponsorship, collateral and history of dealings between WS Communities, Ready Capital and his firm allowed the trio to close the transaction during what he described is one of the most challenging times to do so in recent history.
According to the firms, a portion of the financing will be held in a reserve to develop new accessory dwelling units across the Samo Apartments Portfolio. “In addition to a budget for new ADUs, the recapitalization sets aside reserves to hedge against future rate increases as well as returning equity to the ownership to fund its unrelated acquisition and construction efforts,” Gortikov said. He notably led the capital markets team representing WS Communities.
Gortikov Capital has spent nearly two decades working in the market rate and affordable multifamily advisory and investment space, the firm noted. “Samo Apartments – the largest portfolio of fully affordable housing in Santa Monica – is evidence of the continued development and expansion of GC’s business, which spans throughout both California and the rest of the US,” Gortikov said.