Houston-based Camden obtained the secured credit facility fromRed Mortgage Capital Inc. of Columbus, OH. The facility includes a$175-million variable-rate loan funded with a Fannie Mae discountmortgage-backed security. It is priced at 4.2% per annum for a10-year term, with the interest rate resetting every 90 days afterOct. 1. Camden's capital package also includes a $205-million loan,with a 5.625% fixed-rate interest and 10-year term. There is aone-year option to extend at a variable rate.

|

At yesterday's annual meeting, Camden's CEO Richard Campo saysthe REIT is in good shape financially--with a zero balance on itsline of credit. "We'll use the new credit facility to pay down someof the property mortgages, which should lead to more cash on thebalance sheet by year end," he told analysts and shareholders.

|

Rod Petrik, managing director with Baltimore-based StifelNicolaus & Co., says the facility will do more than knock downa few mortgages. "What they're doing is creating flexibility andcapacity in this market," he explains to GlobeSt.com. "There aretwo reasons why a REIT does this: because they have to or becausethey can. Camden is doing it because they can."

|

Petrik says multifamily REITs and other apartment real estateinvestment companies have been somewhat more successful in raisingcapital in the current market because of their abilities to turn toFannie Mae and Freddie Mac. "When you look at the terms that Camdenis getting on this, it's attractive and something that shoppingcenter companies and office companies wish they would have," henotes.

|

But, the deal isn't just beneficial for Camden. "Traditionally,Fannie has had trouble making inroads with multifamily REITsbecause banks were so competitive," Petrik explains. "But given thecredit crunch, Fannie is looking at increasing market share withsome large, well-capitalized apartment companies." Camden actuallyis following in the footsteps of Chicago-based Equity ResidentialProperties Trust and AvalonBay Communities Inc of Alexandria, VA,both of which have closed on similar facilities during the pastyear.

|

Fannie and Freddie are gaining more of a foothold in REITs, butPetrik doesn't believe the deal volume will be huge. He explainsthat the agencies are dealing with fixed portfolios and they'rereinvesting interest and amortization coming from those assets."It's not like you'll see $65 billion of underwriting in the next12 months," he adds. "I think they want to put their money onlywith well-capitalized partners like Equity, AvalonBay andCamden."

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.