Bethesda, Maryland – October 31, 2016
Walker & Dunlop, Inc. (NYSE: WD) announced today that it recently closed two transactions totaling $111 million using Freddie Mac’s Moderate Rehab loan offering, which provides a flexible liquidity source to properties undergoing signification renovation. The sponsor, Cortland Partners, acquired Camden Renaissance and Arboretum at Southpoint with the plan to perform substantial value-add upgrades, making the Moderate Rehab loan the ideal execution for these transactions.
Freddie Mac’s Moderate Rehab offering has specific loan guidelines and property qualifications:Properties must typically undergo renovations in the range of $25,000 to $50,000 per unit with a minimum of $7,500 designated for interior work.The standard loan term is structured as a 3+7-year term, with a 3-year interim phase while the property is under renovation followed by the 7-year permanent phase. The interim phase includes interest-only payments and can vary in length based on borrower preference.An initial disbursement of up to 80% Loan-to-Purchase Price is funded at loan origination. The borrower can draw upon a series of subsequent advances over the renovation period to pay for up to 80% of the costs incurred for completed renovations.Properties must maintain a break-even occupancy during the renovation period, based on the interest-only, fixed rate equivalent.Various floating and fixed rate structures are available on a loan-by-loan basis.Eligible sponsors are experienced and well-capitalized borrowers who have successfully completed rehabilitation projects of similar scope and are familiar with the Freddie Mac loan process.
Camden Renaissance and Arboretum at Southpoint are garden-style apartment complexes with a combined 938 units, located in Altamonte Springs, Florida and Durham, North Carolina, respectively. The Moderate Rehab loans secured by these properties were structured as float-to-float executions, with an initial three-year, floating rate interest-only period, allowing the borrower to complete planned renovations and upgrades, followed by a seven-year floating rate loan term with two years of interest-only payments.
Richard Martinez, vice president of Freddie Mac Multifamily, commented, “We designed the Freddie Mac Moderate Rehab loan to ensure borrowers have a flexible source of financing for renovating America’s aging rental stock. Today’s announcement underscores Freddie Mac’s partnership with Walker & Dunlop and our shared commitment to provide the multifamily industry with flexible financial solutions.”
Stephen Farnsworth, New Orleans-based managing director led the team that closed Walker & Dunlop’s first Moderate Rehab loans. Mr. Farnsworth stated, “Freddie Mac’s Moderate Rehab Loan allowed Cortland Partners, a long-time client and experienced Freddie Mac borrower, to secure permanent financing while completing extensive renovations that will drive profitability for years to come. As one of the top Freddie Mac lenders in the country, Walker & Dunlop is able to quickly take advantage of Freddie Mac’s new and innovative offerings, like the Moderate Rehab Program, allowing us to tailor financing to borrowers’ specific needs and meet the changing demands of the multifamily market.”
About Walker & Dunlop
Walker & Dunlop (NYSE: WD), headquartered in Bethesda, Maryland, is one of the largest commercial real estate services and finance companies in the United States providing financing and investment sales to owners of multifamily and commercial properties. Walker & Dunlop, which is included in the S&P SmallCap 600 Index, has over 600 professionals in 28 offices across the nation with an unyielding commitment to client satisfaction.