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Providing Liquidity for Targeted Affordable Property in Historic Federal Hill

Name:	Sharp Leadenhall Apartments I & II
Location:	Baltimore
Loan/Deal Type:	Freddie Mac Bond Credit Enhancement – 4% LIHTC
Number of Units:	192 units
Loan Amount:	$17 million

Freddie Mac recently provided nearly $17 million in financing through Deutsche Bank Berkshire Mortgage in a funded forward commitment to assist the borrower, Sharp Flats Limited Partnership, in acquiring and upgrading Sharp Leadenhall I & II Apartments. These apartments are one of the few remaining affordable complexes in the historic Federal Hill neighborhood in Baltimore, within walking distance of the Inner Harbor, Oriole Park at Camden Yards and M&T Bank Stadium. The property's 192 units are located in mid-rise and townhouse apartment buildings.

Renovations will require little to no relocation of tenants, after which tenants will benefit from upgraded apartments at subsidized or restricted rents due to the property's HUD Section 236 Interest Reduction Payment Agreement, Section 8 project-based assistance contract and low-income housing tax credits (LIHTCs). The transaction, benefiting from the Freddie Mac Bond Credit Enhancement – 4% LIHTC product, was comprised of a real estate bond credit enhancement amount of $10.02 million, and an additional $6.93 million of bond credit enhancement based on the HUD-approved decoupling of the Section 236 contract and the remaining Section 236 subsidy payments.

"Our borrower sponsors, repeat Freddie Mac borrowers Evergreen Partners and The Wishcamper Group, were pleased with the timely and predictable process for completing a complex transaction," said Audrey Morris, vice president and chief underwriter for the Freddie Mac Targeted Affordable Housing Delegation Product at Deutsche Bank Berkshire Mortgage.

Freddie Mac offers various financing alternatives for the preservation of existing affordable properties with rent or income restrictions. Specialized products are available for substantial and moderate rehabilitation of affordable properties with and without LIHTCs funded entirely or in part by the sale of fixed- or variable-rate tax-exempt bonds. The Freddie Mac provision of credit enhancement for swap hedges in connection with variable rate bond credit enhancements is designed to provide a superior financing solution for customers working to preserve affordable housing. However, depending on market conditions, borrowers may choose between swap or cap hedges and fixed-rate bonds.

• Read More Examples of Multifamily Financing