FirstService Financial: A Refinancing Success Story
Did you know FirstService Financial (FFI) assists FirstService Residential clients in fulfilling their financing requirements at the most competitive interest rates and terms available? FFI has facilitated or assisted in loan placements in excess of $1 billion for cooperatives and condominium associations.
The transaction outlined here illustrates why many of our clients choose to participate in FFI’s programs, which provide added value based on the global purchasing power of our parent company, FirstService Corporation.
“We are thrilled with the highly favorable terms that FFI was able to secure for us,” says Elsie Stark, The Howard Owners Board President. “FFI’s professional guidance is a great benefit of having FirstService Residential as our management company.”
The Howard Owners, Inc.
483-unit cooperative in Rego Park, NY
Balance at Prepayment: $20,100,000
Original Interest Rate: 5.11%
Taking a proactive approach, FFI consistently reviews the loans across the FirstService Residential portfolio to identify upcoming client needs. FFI noticed The Howard Owners loan was maturing in 12 months and reached out to the property manager to initiate a conversation with the board. The manager disclosed the board was already in discussions with their incumbent bank, National Cooperative Bank (NCB), but knew FFI could add value.
The co-op was concerned about a rising rate environment and the risk of higher future mortgage payments. FFI analyzed the new loan request and uncovered the existing loan had a prepayment penalty of about $1,000,000.
Knowing the pristine financial condition of the building, FFI approached NCB and was able to negotiate a reduction in the interest rate by over 30 basis points, saving the co-op $350,000 over the course of the loan. In addition, the new loan reduced the annual debt service payment by $200,000 or $2,000,000 over 10 years. The savings more than justified the cost of the prepayment penalty.
FFI was able to close the loan within 40 days of engagement and alleviate all of the board’s concerns about volatility in the capital markets.
New Interest Rate: 4.16%
The transaction outlined here illustrates why many of our clients choose to participate in FFI’s programs, which provide added value based on the global purchasing power of our parent company, FirstService Corporation.
“We are thrilled with the highly favorable terms that FFI was able to secure for us,” says Elsie Stark, The Howard Owners Board President. “FFI’s professional guidance is a great benefit of having FirstService Residential as our management company.”
The Howard Owners, Inc.
483-unit cooperative in Rego Park, NY
Existing Situation:
Original Mortgage: $22,000,000Balance at Prepayment: $20,100,000
Original Interest Rate: 5.11%
Taking a proactive approach, FFI consistently reviews the loans across the FirstService Residential portfolio to identify upcoming client needs. FFI noticed The Howard Owners loan was maturing in 12 months and reached out to the property manager to initiate a conversation with the board. The manager disclosed the board was already in discussions with their incumbent bank, National Cooperative Bank (NCB), but knew FFI could add value.
The co-op was concerned about a rising rate environment and the risk of higher future mortgage payments. FFI analyzed the new loan request and uncovered the existing loan had a prepayment penalty of about $1,000,000.
Knowing the pristine financial condition of the building, FFI approached NCB and was able to negotiate a reduction in the interest rate by over 30 basis points, saving the co-op $350,000 over the course of the loan. In addition, the new loan reduced the annual debt service payment by $200,000 or $2,000,000 over 10 years. The savings more than justified the cost of the prepayment penalty.
FFI was able to close the loan within 40 days of engagement and alleviate all of the board’s concerns about volatility in the capital markets.
FFI Solution:
New Mortgage Amount: $21,500,000New Interest Rate: 4.16%
- FFI locked in a rate of 4.16% on a 10-year, 40-year amortizing mortgage.
- The total prepayment cost was $1,000,000. The association was able to reduce its annual debt service payment by $200,000 or $2,000,000 over 10 years. It also received $225,000 in proceeds at closing.
- Through its relationship with NCB, FFI was able to negotiate lower closing costs and a lower interest rate compared to what the co-op negotiated direct with NCB. The rate was 30 basis points lower than what NCB offered direct, saving the cooperative $350,000 over the life of the loan.
- FFI was able to close this refinance within 40 days of engagement by the co-op, delivering on everything they discussed with the board of directors.