Amerant Bank has originated a $17.5 million loan to finance Frontal Trust Investment Management’s acquisition of a 125-home portfolio in Miami-Dade County.
The five-year term includes a two-year interest-only term, with a low interest rate and flexible prepayment options, according to Berkadia, which arranged the financing. The loan is the first single-family residential financing in Real Estate Capital USA’s newly launched lending database.
Berkadia declined to disclose additional details, but noted that the financing also included a credit facility so that Frontal Trust can continue to grow its portfolio of single-family rentals in the sub-market.
The purchase, consisting of both individual condo units and single-family homes, is indicative of growing interest on the part of large commercial real estate players in single-family residences and build-to-rent properties, Brad Williamson, managing director, told Real Estate Capital USA.
There is rising interest from institutional investors like Starwood and Nuveen, Williamson said. “Historically, it has only been private client-type investors,” he noted.
While institutional interest in the single-family residential space has surged, the financing infrastructure has not kept pace, Williamson added, noting that Berkadia sees a niche in helping borrowers to close this gap.
“There has been an increase in demand for single-family rental product throughout the US, by both private and institutional investors. However, there is not an abundance of capital providers financing this asset type. We were successful obtaining attractive terms from a range of sources including banks to Wall Street capital to maximize our clients’ overall return based on their investment strategy.”
Investors turn to Florida
The solid fundamentals of the south Florida housing market played a big role in Frontal Trust’s evaluation and ultimate acquisition of the portfolio, Williamson said. “Significant population and rental rate growth in the last 12 months, coupled with pro-business regulations and no income taxes policies has made Florida an attractive place to both live and invest in.”
Luis Felipe San Martin, managing partner of Frontal Trust, touted Berkadia’s ability to understand the transaction. “In a hot and fast-moving market like Florida, Berkadia’s network and understanding of the scattered SFR space was key to secure competitive financing terms in a short timeframe,” San Martin said. “These terms allow us to offer an attractive risk-reward profile strategy to our private and institutional investors.”
Frontal Trust, with more than $2.5 billion of AUM in the US and Latin America, started investing in the US as a limited partner in 2017 via a $50 million fund. In May 2020, it opened an office in Miami and subsequently raised a $22 million residential credit fund that originates and acquires short-term loans for single-family residential assets in the US.