02/22/2013

Goldman Taps CBRE for Big Freddie Package

CBRE Capital Markets is originating about $1.1 billion of Freddie Mac loans to finance a Goldman Sachs partnership’s acquisition of a multi-family portfolio from Equity Residential Properties.

The debt package consists of individual floating-rate loans on 27 complexes encompassing 8,010 apartments. Each loan has a seven-year term.

Goldman and its partner, Greystar Real Estate of Charleston, S.C., drew down part of the funding on Feb. 12, when they closed on the purchase of 10 of the properties. The remaining loans will be funded on March 21, when the remaining 17 properties are acquired. The Goldman team is paying a total of $1.5 billion, or $187,000/unit.

This marks the second giant Freddie loan package to a single borrower this year. In January, Berkadia Commercial Mortgage wrote $1.5 billion of loans for apartment operator Southern Management of Vienna, Va. That fixed-rate debt package consisted of individual 10-year loans on 69 Virginia and Maryland complexes with 22,566 apartments.

Market pros presume Freddie will securitize both debt packages via standalone deals. If so, the offerings would be among only a few single-borrower securitizations floated by the agency.

The Equity Residential portfolio, which is 95% occupied, consists of properties in and around Washington, Phoenix, Denver and San Francisco, as well as in Florida, Northern New Jersey and Southern California. The largest concentration, 1,745 apartments, is in Northern Virginia.

The properties run the gamut in terms of size and age. The largest is the 510-unit Mountain Terrace Apartments, at 25399 The Old Road in Stevenson Ranch, Calif., about 30 miles northwest of Los Angeles. Next in size are two Florida properties — the 494-unit Sunforest complex in Davie and the 466-unit Savannah Lakes complex in Boynton Beach.

The newest complexes were built in 2002. They are: the 280-unit Grandeville at River Place, at 2980 Grandeville Circle in Oviedo, Fla.; the 272-unit Whisper Creek, at 3505 South Nelson Circle in Lakewood, Colo.; and the 218-unit Townes at Herndon Center, at 508 Pride Avenue in Herndon, Va. The oldest, the Iron Horse Park apartment community, at 225 Coggins Drive in Pleasant Hill, Calif., was built in 1973.

When the acquisition was struck in early January, Goldman and Greystar were given the option of excluding from the deal properties whose allocated values accounted for up to 8% of the purchase price. If it exercises that option, the partnership will buy fewer than 17 properties in the second stage and reduce its borrowings accordingly.

Chicago-based Equity Residential sold the properties to raise capital for its pending purchase of 60% of the portfolio owned by Archstone, the big apartment REIT in Englewood, Colo. In November, Equity Residential agreed to pay $9.6 billion for 78 properties with 23,110 units, four properties under development and 15 potential development sites. AvalonBay Communities of Arlington, Va., is buying the rest of Archstone’s holdings.

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