Freddie Mac Purchases Eight Loans Totaling $328 Million from Centerline Capital Group to Refinance Suburban Washington, DC Portfolio
November 28, 2011
Working closely with Centerline Capital Group, Freddie Mac recently purchased eight loans totaling $328 million that enabled 50/50 partners Pantzer Properties and new borrower Dune Real Estate to refinance a multifamily portfolio consisting of eight properties and nearly 2,600 units in suburban Washington, DC. The deal represents the largest financing transaction closed this year by Centerline and one of the largest portfolios of loans financed this year by Freddie Mac. The transaction also underscores Freddie Mac's commitment to maintaining liquidity for multifamily loans by finding secondary market solutions for complex projects while maintaining strong underwriting standards that mitigate the risk of loss.
"This deal had multiple layers of complexity and I can't tell you how impressed we were with Centerline's flexibility and speed-of-execution based on our priority to close on a specific date," said Jason Pantzer, Co-President of Pantzer Properties, Inc. "Centerline worked closely and efficiently with Freddie Mac as the investor in this transaction in order to meet our timing needs," he added.
Since Freddie Mac had been working with Centerline on the deal for nearly a year and had completed other deals with Pantzer previously, the familiarity with the borrower, market, and underlying real estate assets enabled Freddie Mac to lock the interest rate with less detailed information and push a lot of the due diligence into full underwriting, according to Rachel Levy, SE Regional Director of Underwriting. "Meeting the borrower's tight timeframe for closing presented challenges, especially considering it was eight separate transactions, but because of our strong partnership with Centerline, we were able to move quickly and efficiently to complete our full underwriting and obtain all approvals for this secondary market transaction in a timely manner." "Freddie Mac has worked to streamline the speed of the rate-lock process without impacting the strength of our underwriting," said Levy.
The properties are located within the City of Alexandria, Fairfax, Loudoun, Prince William, and Montgomery counties. The eight properties contain a total of 2,580 units and were constructed between 1975 and 2000.
The transaction was processed as an Early Rate Lock Capital Markets Execution (CME) and featured both 5- and 7-year fixed-rate loan terms. Two key components of the deal were Freddie Mac's ability to rate lock in less than 7 days – during a period of significant market volatility – and issue commitments within two weeks of receipt of complete underwriting packages. "We were very pleased to be able to capitalize on the low interest rate environment and close on a financing that maximizes flexibility for our investment," said David Oliner, Managing Director of Dune Real Estate Partners.
Through its experience with deals like this, Freddie Mac has since developed and rolled out some new enhancements to its Early Rate Lock program. According to Levy, this transaction is a good example of how these enhancements can put a borrower in position to lock the interest rate earlier in the process. "We want to provide borrowers with a more streamlined approach to conducting transactions," said Levy.
John Beam, leader of Centerline's Atlanta team that structured the transaction commented: "It was a team effort on Freddie's part, but I can't say enough about what Steve Lansbury, Rachel Levy, Lisa Blasberg and Paul Miller and several other Freddie Mac attorneys did to make it happen."
"It was as well-oiled a machine as I've ever seen in an agency execution," said Pantzer. "Centerline did a fantastic job interacting with Freddie and anticipating our every need and the level of communication between all parties involved was truly remarkable."