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Freddie Mac a 'Powerful Source of Financing' in Seniors Housing Market

Name:	Brightview portfolio
Location:	Seven properties in Rhode Island, Massachusetts, Maryland and Virginia
Loan/Deal Type:	Acquisition Rehabilitation Mortgage with 7-Year ARM
Number of Units:	880
Loan Amount:	$140 million

Freddie Mac's purchase of a $140 million pool of mortgages from Capmark Finance, combined with a majority investment from sponsor Prudential Real Estate Investors (PREI®), enabled The Shelter Group to refinance seven Brightview seniors housing properties and recapitalize.

"This was a successful cross-regional effort on a quality portfolio that contributed to our affordable housing goals," said Mitchell Kiffe, Freddie Mac vice president of Production and Sales. "One of the properties had not yet reached stabilization, but the pool crossing of the properties, five of which are near 100 percent occupancy, the strong markets, PREI's investment expertise, and the seniors housing experience of The Shelter Group, a high-quality operator, gave us the comfort to do this transaction."

The mortgages are secured by five independent living facilities and two assisted living facilities comprising 880 units located in Rhode Island, Massachusetts, Maryland and Virginia.

"The Freddie Mac program is a powerful source of financing to the seniors housing industry," said Philip Brooks, Capmark Finance senior vice president. "Structuring financing for portfolios can be complicated and have many moving parts. Freddie Mac understands our customers' objectives and has the flexibility to work with us to structure attractive deal terms to meet their needs. That's what they did for the Brightview portfolio."

"The transaction featured a 10-year plus one-year fixed-rate mortgage with seven years of partial interest only benefiting from the Freddie Mac Fixed-to-Float option and the Freddie Mac Standard Delivery Option. David Carliner, executive vice president for The Shelter Group, said, "Freddie Mac stood by us despite the fact that the financial markets saw more turbulence from the inception of the transaction until its closing than the industry had experienced in a very long time. The terms offered by Freddie Mac were super competitive, and Capmark was a strong advocate for the deal and made sure that all of the pieces came together in the end."

Through this transaction, PREI purchased a majority interest in the properties on behalf of institutional investors in its Seniors Housing Partners III L.P. fund, the proceeds of which funded The Shelter Group's recapitalization.

"This was a large portfolio loan that was part of an even larger transaction, professionally executed during one of the more turbulent periods in the financial markets I have ever witnessed," said Noah Levy, portfolio manager for PREI's Senior Housing Partners III.

With the Freddie Mac Fixed-to-Float Option, borrowers agree to a yield maintenance provision that applies to the full fixed-rate loan term and in return, they can extend the term of the loan one year on a floating rate, allowing for additional time to seek refinancing or pay off the loan at par.

Through our Program Plus Seller/Servicers® and the Freddie Mac Seniors Housing product, we have provided financing for a wide variety of seniors properties throughout the country for many borrowers. We understand the seniors housing industry and have dedicated professional staff to serve this market.

• Read More Examples of Multifamily Financing