The Domain includes four and five residential stories built over ground-level parking.

SAN JOSE—Many factors were at play for a recent Freddie Mac loan for repeat Newmark Knight Frank/Freddie Mac sponsor, Prime Residential. The $166 million loan was recently obtained for the acquisition of Domain Apartments, a 444-unit property that was built in 2014.

NKF was able to provide flexibility for Prime during the bidding process and throughout the transaction. NKF executive managing director, Mitch Clarfield, with director Ryan Greer, provided the 10-year full term interest-only debt at 65% loan to value. NKF also worked closely with Prime and Freddie Mac to determine that the property qualified for a Green-Up execution, which removed the transaction from Freddie Mac's annual production cap, allowing Freddie Mac to offer additional interest rate savings to Prime.

“It was a confluence of circumstances that led to the green execution,” Clarfield tells GlobeSt.com. “Fannie and Freddie were asking everyone to consider green-up execution, but with the property's construction date, we were surprised it would qualify. But because it was built without LED lights, changing out all of the interior corridors and exterior lights to LED was the qualifier. To take a property built more than two years ago and have a 30% savings in energy and water was the answer.”

Clarfield said the team was able to index lock the transaction quickly in order to capture a decrease in Treasury rates, providing Prime with a more cost effective set of financing options.

“Better still, our partnership with Freddie Mac and excellent relationship with Prime provided us the opportunity to close the transaction under the Freddie Mac Green Advantage Program providing Prime with more favorable terms and helping Freddie Mac achieve its mission to provide more sustainable housing,” said Clarfield.

In addition, he said this transaction may be an example of a bigger trend in terms of yield.

“We are seeing more investors accepting lower yield for quality core real estate than they might have considered 12 to 18 months ago,” Clarfield tells GlobeSt.com. “This is accelerating the abundance of investors looking for properties to put away for long-term yield.”

Surrounded by shopping, restaurants and leading high-tech companies at 1 Vista Montaña, the Domain includes four and five residential stories built over ground-level parking. Tenants may choose from one-, two- and three-bedroom units, most of which are townhouse style. More than half the units include private rooftop terraces. The pet-friendly apartments feature 9-foot ceilings, stainless steel appliances, granite countertops, and in-home washer and dryers. Resident amenities include a fitness center, indoor/outdoor resident lounge and heated pool with cabanas.

As anticipated, Silicon Valley commercial real estate activity decelerated in the first quarter of 2019, according to a report by Colliers International. The slowdown was expected, given the number of massive deals signed in fourth quarter 2018, clearing the market of prime available space.

According to California's Employment Development Department, the unemployment rate in Santa Clara County rose slightly quarter over quarter to 2.8%, however, remains below the year-ago estimate of 3% and below the state average of 4.2%. The technology sector is continuing to fuel the economy. In February alone, technology companies added 2,700 jobs in Santa Clara County, says the report.