La Jolla, CA-based Reven Housing REIT Inc., an owner and operator of single-family residential properties, has successfully closed a new mortgage loan for $51.3 million. The financing, originated by Arbor Agency Lending, LLC, an approved aeller/aervicer for Federal Home Loan Mortgage Corp. (Freddie Mac), is a seven-year, interest-only loan with a fixed interest rate of 4.74%.
According to a prepared release, the loan was secured by 824 of Reven’s currently owned single family homes. Proceeds of approximately $33 million were utilized to pay off and replace the company’s eight outstanding amortizing mortgage notes.
Additionally, as a result of the financing, Reven received approximately $17 million of cash proceeds, net of transaction fees, that will be utilized for future acquisitions of rented single family homes. This financing extends the maturity date on its mortgage portfolio seven years until October 2025 at the fixed rate of 4.74%.
As part of the lender’s due diligence process, a full valuation of the company’s portfolio was performed. This valuation resulted in an estimated market value of the company’s portfolio of $94.8 million. This valuation suggests an estimated net asset value for Reven, as of September 30, 2018, of approximately $6.00 per share.
Thad Meyer, Chief Financial Officer of Reven Housing, stated, “Reven continues to diversify its sources of capital to support the Company’s growth as demonstrated by this financing with Freddie Mac. This financing expands the Company’s debt capacity, lengthens the maturity date and reduces debt service obligations as we convert to an interest only payment. We have eliminated our near-term refinancing risk as well as our cost of funding while realizing nearly $17 million of excess proceeds that we can redeploy into acquiring additional rental homes.”
Chad Carpenter, Chief Executive Officer of Reven Housing, added, “The refinancing and expansion of our debt capacity with Freddie Mac along with the completed lender diligence reflects an increased net asset value of the Company. As Reven matures in the public markets and continues to grow its business, I remain confident that the team’s hard work will be fully recognized in the Company’s share price.
Reven currently owns and operates 826 single family rental properties in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.