Credit Unions Fund $9M Loan for Alabama Apartments
Member Business Financial Services arranges the loan led by Launch Credit Union of Florida.
A group of four credit unions has closed on a $9 million commercial loan on a 168-unit apartment complex in the Birmingham, Ala., metro area.
Launch Credit Union of Merritt Island, Fla. ($1.4 billion, 81,846 members) led the credit unions funding the loan May 16. The credit unions are affiliates of Member Business Financial Services (MBFS), a CUSO based in Bucks County, Pa., which arranged and will service the seven-year loan.
Craig Page, MBFS’ chief revenue officer, said the deal had low leverage with the borrower providing $6.5 million in equity into the loan in addition to transaction costs.
Also, $2.5 million of the loan was held-back at closing to be used for updates and renovations to The Park at Rocky Ridge apartment complex on 14.8 acres in the Birmingham suburb of Hoover. The complex is 99% occupied and includes a clubhouse, pool, business center and playground.
NCUA data showed credit unions originated $7.8 billion in commercial loans backed by real estate in the first quarter, down 35% from a year earlier. Multi-family represents the largest class of commercial real estate loans held by credit unions.
Page said multi-family is one of the strongest and safest classes of commercial real estate given the high demand for affordable housing.
“This asset class provides a solid collateral to lenders since this asset class typically has a lower risk profile,” Page said. “In recent years, the multi-family sector has outperformed many other commercial real estate asset classes and has delivered stable, solid returns for investors.”
MBFS was founded in 2008 and is owned by American Heritage Federal Credit Union of Philadelphia ($4.6 billion, 287,627 members) and 12 other credit unions.
MBFS manages a loan servicing portfolio of just over $2.5 billion. This portfolio is comprised of about 7,000 commercial loans and represents the interests of over 100 credit unions nationwide.
Page said the loan servicing fee for the Birmingham loan is 25 basis points, which is MBFS’ standard servicing fee on all commercial real estate loans.
The closing was managed by Rob Thomas, an MBFS SVP who serves as its relationship manager for the southeast.