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WASHINGTON, DC-Capmark Finance Inc. has closed on the initial funding of a $725-million loan portfolio that has been secured for an estimated 21,000-unit portfolio spread across 65 properties in Maryland and Northern Virginia. The sponsor was Southern Management Corp. in Vienna, VA. This portfolio represents the bulk of the privately held firm’s 25,000 unit assets.

Freddie Mac was the lender. The deal, which closed Wednesday, was completed under its Early Rate Lock program, John Reed, a vice president in Capmark’s Richmond office, tells GlobeSt.com. “Just the size of the deal alone makes it a significant transaction. This deal also was the first two-year forward rate lock for Freddie Mac.” Typically the agency has not gone out beyond 12 months, he says. Freddie Mac, in this case, customized the loan because it wanted to win the business.

The initial funding is a $680.17-million loan secured by 61 properties. An additional $44.83 million that will be secured by four properties is expected to be funded this October.

Reed says that Southern Management wanted the refinancing to consolidate and simplify its overall financial structure. “That is why this execution worked best for [chairman and CEO David Hillman]. It puts everything under one lender, with identical loan terms.”

Southern Management waited to close the deal until now because 40 of the loans have just opened for prepayment. An additional 18 loans, which had an aggregate unpaid principal balance of almost $162 million, were defeased by Capmark Securities Inc., an affiliate of Capmark Finance. This deal also marked the first forward defeasance transaction closed by Capmark Securities.

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