- What Wells Fargo, Citigroup and Goldman Sachs are providing a five-year financing package
- Why Onni will use the proceeds to retire existing debt
- What next The lenders intend to securitize the senior mortgage via a single-borrower CMBS offering
Onni Group has turned to Wells Fargo, Citigroup and Goldman Sachs for US$1 billion of fixed-rate debt to refinance eight high-rise apartment complexes in Chicago and Southern California.
The five-year financing package, which hasn’t closed yet, would comprise an US$875 million senior mortgage and a US$125 million mezzanine loan. The 2,791-unit collateral portfolio includes 565 furnished apartments that are designated as short-term rentals.
The lenders, led by Wells, intend to securitize the senior mortgage via a single-borrower CMBS offering that could price as early as next week (ONNI 2024-APT).
Vancouver-based Onni built the collateral properties from 2015 to 2023. It tapped Eastdil Secured to line up the financing. It would use US$930.5 million of the proceeds from the new financing to retire existing debt, while another US$19.4 million would be set aside as reserves. After covering an estimated US$20 million of closing costs, the borrower expects to pocket US$30.1 million.
The collateral properties recently were appraised at US$1.55 billion, including a roughly 2% premium they would command if sold as a package. That puts the projected loan-to-value ratio for the overall debt package at 64.5%. The aggregate value of the individual properties was pegged at US$1.52 billion, which would lift the LTV to 66%.
The anticipated debt yield would be 7.9% and the debt-service coverage ratio would be 1.13 to 1, based on the collateral pool’s underwritten net cashflow of US$79.2 million.
Chicago, California portfolio
The 2,226 unfurnished units in the portfolio are 97.1% occupied, and the weighted average rent is US$3,320. Apartments range from studios to three bedrooms, and some properties have townhouse-style and penthouse units.
The largest property in the portfolio is the 456-unit Old Town Park Three, at 228 West Hill Street in Chicago. Completed in 2021, it offers no furnished short-term rentals. The other Chicago properties are:
- Old Town Park One, at 1140 North Wells Street. Completed in 2018, it has 405 units (including 35 furnished apartments).
- Onni Fulton Market, at 354 North Union Avenue. Completed in 2022, it has 373 units (56 furnished).
- 369 Grand, at 341-369 West Grand Avenue. Completed in 2021, it has 356 units (99 furnished).
- 750 Hudson, at 750 North Hudson Avenue. Completed in 2017, it has 240 units (none furnished).
The largest of the California properties is the 432-unit Onni East Village, at 330 East Third Street in downtown Long Beach. Completed in 2023, it has 32 furnished apartments. The other two California properties are in Los Angeles:
- Level Los Angeles, at 888 South Olive Street. Completed in 2015, all 303 of its units are furnished.
- SMB Hollywood, at 6933 Santa Monica Boulevard. Completed in 2023, it has 226 units (40 furnished).
Onni, which owns and operates multifamily buildings encompassing about 11,800 units, develops residential, office, retail, industrial and hotel properties throughout the U.S. and Canada.