Capmark Financial secured the loan through HUD's 221 (d) multifamily program, a 40-year non-recourse permanent mortgage with an interest rate of 6.9%. The transaction closed last week, Richard Price, senior vice president and branch manager, tells GlobeSt.com. The way it works is straightforward: HUD insures the mortgage the Capmark has issued on the program, allowing the lender to combine both construction and permanent financing in a single package. Capmark is an active user of this program.
Last year Congress approved an increase in the program's statutory limits--a welcome development for high-cost areas along the East Coast, Price says. "With the credit crisis we are in right now, the FHA programs are much more valuable than they ever have been before."
The cost of developing the property will be slightly less than the $25-million mortgage, Price says. "ACPT owns the land outright and that has allowed financing to be higher than the leverage. It is a loan that is nicely leveraged--but not overly leveraged to create risk to Capmark or FHA." ACPT did not return a call to GlobeSt.com in time for publication.
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