Client Focus Corner

In early December, one of our more active clients, CST Land Developers, reached out to see if we could finance a sale of one of their apartment properties. The purchaser was The Gateway Companies, who have developed and currently operate over 7,000 units with over 40 years in business. I have known Gateway for many years but have never found the right financing opportunity.

Last year, Gateway Management was awarded a large 3rd party management contract for over 1,000 units in North Baton Rouge. This Baton Rouge presence allowed them to start looking for acquisitions to add to their portfolio.

CST Land Developers had an affordable property that just completed its required tax credit compliance period. The property was a 136-unit apartment property in Denham Springs, La. which was in average condition but in need of repositioning and light renovation. CST was not interested in repositioning the asset and opted to enter into a Sales Agreement with Gateway. There was existing long-term bond debt which Gateway had the opportunity to assume, but due to the structure and non-flexibility of the contracted terms, Gateway opened discussions with Fidelity to structure more appropriate terms needed to execute the planned reposition.

Fidelity negotiated an acquisition/construction loan that will allow the purchaser to renovate the interior of the units and common amenities, increase rental rates to current market rates, and extend good affordable housing in the market.

Additionally, we completed approval and closing within a fairly tight time frame before the expiration of the purchase agreement which coincided with the notice of pay-off of the then “bond financing” company.

All parties are pleased, Fidelity gained a new client and deposit relationship. Gateway is looking at additional opportunities in Louisiana and I expect this relationship to grow.

Submitted by Randy Crochet, Commercial Relationship Manager