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CMA
May 05, 2017  

Berkeley Point Backs Big Starwood Takeover

Berkeley Point Capital originated $2.2 billion of Freddie Mac loans last Friday to finance Starwood Capital’s takeover of Milestone Apartments.

The floating-rate mortgages are backed by 74 apartment properties, with 22,967 units, in 10 states. Freddie is expected to securitize the 10-year loans in a stand-alone offering.

Starwood, an investment shop in Greenwich, Conn., paid roughly $2.8 billion to acquire Toronto-based Milestone, a public REIT. It financed $2.2 billion of that amount with the Berkeley Point loan and funded the rest with cash. Milestone distributed $1.5 billion of the sales proceeds to its shareholders, and the balance was used to retire existing debt.

Most of Milestone’s properties are in Texas and Florida, with the rest scattered across Arizona, California, Colorado, Georgia, Maryland, North Carolina, Tennessee and Utah. The garden-style properties range widely in age, from new to 43 years old.

For some loans, Berkeley Point tapped Freddie’s Green Advantage program, which offers borrowers additional proceeds and better terms if they commit to take steps to reduce the use of energy or water by at least 15%.

Half of the balance of Berkeley Point’s financing package is exempt from Freddie’s $36.5 billion annual loan-purchase cap because the collateral for those loans qualifies as affordable housing, with rents not exceeding 60% of the area median income.

At yearend, Milestone’s portfolio was 94.6% occupied at an average rent of $974. The portfolio produced $72.2 million of revenue and $42.8 million of net operating income last year.

This was Berkeley Point’s second big financing for Starwood in recent weeks. In late February, the shop wrote $250.4 million of Freddie loans to finance Starwood’s purchase of 11 apartment properties, with 2,139 units, from Holland Partners of Vancouver, Wash. Those properties are in Washington (seven), Colorado (two), Oregon (one) and Arizona (one).

Berkeley Point, which is based in Bethesda, Md., is owned by Cantor Fitzgerald affiliate CCRE. Last year, Berkeley Point sold $2.9 billion of multi-family mortgages to Freddie, ranking fifth among agency lenders. The shop also sold $3.9 billion of loans to Fannie Mae, also ranking fifth.