Freddie Mac has funded its first mortgage using the new mezzanine finance arrangement: The government-sponsored enterprise has purchased a $47 million first mortgage from M&T Capital Realty Corp. for a property in the Washington, D.C., suburbs. The borrower, Metropolitan Apartments at Camp Springs LLC, secured a mezzanine loan for $6.75 million from Berkshire Properties.
The property, Metro Place at Camp Springs, is a 397-unit garden-style affordable apartment community located in Camp Springs, Md., and was constructed in 2007. When the economic downturn for this market began in 2008, the property value declined, making refinancing difficult.
‘The borrower had [a loan-to-value ratio] just above the standard program requirements — above 80 percent,’ explains Dan Brendes, vice president of M&T Realty Capital. ‘Mezzanine financing was needed to address the borrower's need for additional financing and to address a pending loan maturity issue. The mezzanine arrangement is a great solution for when you are just over the dollar amount available through conventional financing.’
Freddie Mac announced the mezzanine finance arrangement in March. The company has partnered with Berkshire Properties, Carmel Partners, Essex Property Trust and Waterton Capital Solutions LLC to provide mezzanine financing for the senior mortgages Freddie Mac purchases from lenders.
SOURCE: Freddie Mac
