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SAN FRANCISCO-G.W Williams recently recapitalized four Northern California apartment properties with $39-million, 65% fixed-rate Fannie Mae financing, according to the company that arranged the deal, Highland Realty Capital. The properties were extracted from a larger existing Freddie Mac facility.

The 11-year financing was priced at 6.15% fixed for 10 years (one year variable following), amortized over 30 years, with yield maintenance. Highland was able to extract the properties and structure the deal as four new loans while leaving in place the variable-rate credit line portion of the larger facility, which was reportedly priced around 2% at the time.

“We structured four new, fixed-rate Fannie Mae loans, removing the properties from the Freddie Mac Facility as standalone deals, but were able to leave the very attractive priced variable-rate credit line portion of the Facility in place,” says Highland’s Jeffrey Eliason. “And by removing the properties from the Facility, we were able to achieve excess proceeds, part of which may be used for new acquisitions.”

The four properties involved in the deal are Antelope Vista, a 196-unit property in Antelope, CA; Rocklin Manor, a 157-unit property in Rocklin, CA; Evelyn Gardens, a 92-unit property in Sunnyvale, CA; and Hazel Wood Apts., a 142-unit property in Orangevale, CA.

The rate locking process for this transaction proved to be a challenging exercise. At the point of rate lock in mid-November, Treasuries were plummeting and Fannie Mae was increasing its spread every few days, by 25-75 basis points each time, to bring them into line with the broader market, Highland said, adding that an early rate lock deposit by G.W Williams resulted in a rate “well below what Fannie Mae could offer clients at the time.”

“Despite the volatile capital market environment, we were able to successfully advise our client on the best structure for their long-term financing and investment strategies,” Eliason said. “This locks up long term debt and allows them to be in position to take advantage of the opportunities caused by the capital market’s dislocation.”

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