Dealmaker: Walker & Dunlop Finances Cortland Partners Acquisitions with $111M

Walker & Dunlop, Bethesda, Md., closed two transactions totaling $111 million using Freddie Mac’s new Moderate Rehab loan offering, which provides liquidity to properties undergoing signification renovation. 

The sponsor, Cortland Partners, Atlanta, acquired Camden Renaissance in Altamonte Springs, Fla. and Arboretum at Southpoint in Durham, N.C. planning substantial value-add upgrades for both, making the Moderate Rehab loan an appropriate execution.

W&D Managing Director Stephen Farnsworth led the debt-placement team from the firm’s New Orleans office. “Freddie Mac’s Moderate Rehab Loan allowed Cortland Partners to secure permanent financing while completing extensive renovations that will drive profitability for years to come,” he said. 

Farnsworth structured the Moderate Rehab loans as float-to-float executions, with an initial three-year floating-rate interest-only period to allow the borrower to complete planned renovations and upgrades followed by a seven-year floating-rate loan term with two years of interest-only payments. 

“We designed the Freddie Mac Moderate Rehab loan to ensure borrowers have a flexible source of financing for renovating America’s aging rental stock,” said Freddie Mac Multifamily Vice President Richard Martinez. 

Camden Renaissance and Arboretum at Southpoint–both garden-style communities–have a combined 938 units. 

Farnsworth said Freddie Mac’s Moderate Rehab offering has specific loan guidelines and property qualifications including:
–Properties must typically undergo renovations between $25,000 and $50,000 per unit with at least $7,500 designated for interior work.
–The standard loan term is structured as a three- plus seven-year term, with a three-year interim phase while the property receives renovations followed by the seven-year permanent phase. The interim phase includes interest-only payments and can vary in length based on borrower preference.
–An initial disbursement of up to 80 percent loan-to-purchase-price funded at loan origination. The borrower can draw upon a series of subsequent advances over the renovation period to pay for up to 80 percent of the costs incurred for completed renovations.