Market Insights

Patience Pays Off: Roers Companies Delivers High Returns with Strategic Refinance of Terra Project

Through calculated risk-taking, strategic partnerships, and a focus on strong fundamentals, Roers Companies consistently strives to deliver impressive returns to our investors. In the dynamic world of multifamily development, timing is everything; with our recent refinance of the Terra project in Maple Grove, patience proved to be a winning strategy. This article delves into the key factors and decisions that led to the project’s refinancing at a 5.85% interest rate, with a seven-year interest-only period, and a 35-year amortization, resulting in a projected 25% return of base investment for investors.

The Roers Cos. team initially targeted a refinance during the third or fourth quarter of 2023. When interest rates spiked in September 2023, however, the team opted for patience. This shift helped us avoid being locked into unfavorable terms because of the changed market landscape. As a result of proactive preparation — including securing third-party reports and legal groundwork — we were able to quickly capitalize on the opportunity when rates dipped in December. Securing a 5.85% rate in a volatile market was a significant win.

We collaborate with debt partners who share our commitment to project success and provide invaluable guidance. They actively seek the best terms and offer diverse options, ensuring tailored solutions for each project. These are groups who truly want to see the project succeed and advise us honestly on the best path forward. Our strong track record and vertically integrated model enabled us to secure a 35-year amortization (exceeding the industry standard of 30 years) with Freddie Mac. This maximized loan sizing and, consequently, investor returns.

Terra’s location in Maple Grove, MN was key. This submarket boasts high median income, robust population growth, and significant demand for multifamily housing. Freddie Mac is mission driven, and providing financing to projects that contain an element of affordability is one of their priorities. Achieving strong rents allowed us to receive interest rate pricing discounts, resulting in a major win-win situation for the project and our investors.

Our projects’ unique construction financing structure provides flexibility for permanent financing timelines. Most of our projects benefit from extended initial interest-only periods, offering valuable time for stabilization and strategic market observation. Instead of being forced to rush into a refinance, we strategically aim to secure construction financing with at least a three-year initial term, usually with extension options. This provides crucial flexibility by allowing us to identify the optimal moment to lock in a competitive refinance rate, rather than being pressured by a looming loan maturity. The extended timeline also allows projects to fully stabilize and give us the opportunity to capitalize on favorable market conditions with our trusted partners. Our deliberate approach empowers us to avoid rushed decisions and safeguards against suboptimal terms, ultimately benefiting the project, our firm, and our investors.

In summation, by opting for strategic patience over rushed execution, the Roers Cos. team capitalized on a quick market shift in December, securing a stellar 5.85% interest rate, seven-year interest-only period, and 35-year amortization — translating to a projected 25% return on base investment for investors.

Roers Cos. remains committed to our opportunistic approach. Our targeted strategy allows us to capitalize on strong market fundamentals and deliver exceptional value to our investors. If you have questions about these market insights or current investment opportunities with Roers Cos., contact our investor relations team or take a closer look at the investment hub on our website:

NO OFFER OF SECURITIES; DISCLOSURE OF INTERESTS: Under no circumstances should any material enclosed herein be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the confidential Private Placement Memorandum relating to the particular investment. Access to information about investments with projects undertaken by Roers Companies LLC, Roers Companies Project Holdings LLC, or any of their respective affiliates is limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who are generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments. Investment outcomes vary. Past success does not guarantee future results.

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