Why Credit Facilities Are Great for Private Investors

LOS ANGELES—Fannie Mae credit facilities are increasing in popularity for borrowers with pools of properties in need of financing. While the product has been available since 2000, Berkeley Point Capital has closed five or six deals this year, compared to one or two deals for the same product in years passed.

“This is a hybrid between unsecured notes and secured debt, and it gives you the benefit of being able to manage the debt side of your balance sheet much more effectively than if you did it one loan at a time,” Mitch Clarfield, senior managing director of Berkeley Point Capital, tells GlobeSt.com. “There is an increased use of these structured transactions from Fannie Mae. They are really a completely different type of financing because we are financing a pool of properties. This is one or several loans secured by all of the properties.”

This loan product provides incredible flexibility on a pool of properties. For example, if a borrower were to secured debt on a three-property portfolio, that borrower could secure a 10-year fixed, 7-year fixed and a floating rate-fixed loan on each property but that isn't attached to a single property. Then, if that borrower decides to sell a property, he can payoff the floating rate portion without having to payoff a loan associated with that property.

“This allows people to get fixed rate financing and still be able to sell the property on an unencumbered basis should they decide to do so later on,” says Clarfield. The benefits are endless. Borrowers could also switch out the collateral, if they decided to trade properties, and they can borrow up against entire pool by putting supplemental loans on each property every year for the first five years.

Of course, these deals are nothing new for big institutions, but they have become available to a broader pool of borrowers. “This is a product that large institutional borrowers have used extensively,” Clarfield says. “What we have done is worked with Fannie to make it more accessible so that smaller and less institutional borrowers could take advantage of the same thing.”

While Berkeley Point Capital isn't the only lender that can put together this deal, Clarfield says that they are one of the few. “There are a few companies that have embraced this product, and those companies are much better prepared to offer it than those that don't,” he says. “The reason that I say that is because it is more than just closing a loan. Once the loan is closed, you are constantly dealing with collaterals.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

LOS ANGELES—Fannie Mae credit facilities are increasing in popularity for borrowers with pools of properties in need of financing. While the product has been available since 2000, Berkeley Point Capital has closed five or six deals this year, compared to one or two deals for the same product in years passed.

“This is a hybrid between unsecured notes and secured debt, and it gives you the benefit of being able to manage the debt side of your balance sheet much more effectively than if you did it one loan at a time,” Mitch Clarfield, senior managing director of Berkeley Point Capital, tells GlobeSt.com. “There is an increased use of these structured transactions from Fannie Mae. They are really a completely different type of financing because we are financing a pool of properties. This is one or several loans secured by all of the properties.”

This loan product provides incredible flexibility on a pool of properties. For example, if a borrower were to secured debt on a three-property portfolio, that borrower could secure a 10-year fixed, 7-year fixed and a floating rate-fixed loan on each property but that isn't attached to a single property. Then, if that borrower decides to sell a property, he can payoff the floating rate portion without having to payoff a loan associated with that property.

“This allows people to get fixed rate financing and still be able to sell the property on an unencumbered basis should they decide to do so later on,” says Clarfield. The benefits are endless. Borrowers could also switch out the collateral, if they decided to trade properties, and they can borrow up against entire pool by putting supplemental loans on each property every year for the first five years.

Of course, these deals are nothing new for big institutions, but they have become available to a broader pool of borrowers. “This is a product that large institutional borrowers have used extensively,” Clarfield says. “What we have done is worked with Fannie to make it more accessible so that smaller and less institutional borrowers could take advantage of the same thing.”

While Berkeley Point Capital isn't the only lender that can put together this deal, Clarfield says that they are one of the few. “There are a few companies that have embraced this product, and those companies are much better prepared to offer it than those that don't,” he says. “The reason that I say that is because it is more than just closing a loan. Once the loan is closed, you are constantly dealing with collaterals.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.