News & Transactions

Berkadia Funds $1.5 Billion Multifamily Portfolio

1/18/2013

The Richmond, Va. office of Berkadia Commercial Mortgage LLC (Berkadia) recently closed a $1.5 billion loan portfolio through Freddie Mac for Southern Management Corporation, the largest privately owned residential property management company in the Mid-Atlantic region. David H. Hillman, chairman and CEO of Southern Management, served as the sponsor on this transaction. As the largest loan funding in Berkadia’s history, this portfolio is also expected to be Freddie Mac’s largest multifamily deal eligible for securitization to-date through its Capital Markets Execution℠ program.
 
The portfolio, originated by Senior Vice President John M.R. Reed, is made up of individual loans ranging from $2.5 million to $135 million on 69 multifamily assets.  The properties, mostly Class A and Class B, are located throughout northern Virginia and Maryland. The communities are a mix of garden, mid-rise and high-rise buildings ranging from 53 to 1,402 units, containing over 23,000 total apartment units and more than 250,000 square feet of office and retail space.
 
“Closing a portfolio of this size at year-end was a challenge, but thanks to the excellent cooperation of the entire Berkadia team, the Southern Management team – including their attorneys and accountants, the Freddie Mac production, underwriting, and legal teams, Troutman Sanders as lender counsel, and the many third-party consultants involved, we were able to close it on time and just as planned,” said Reed.
 
The newest property in the portfolio is Palisades of Towson in Towson, Md. Developed in 2010 by Southern Management Corporation, the Class A+ property is an 18-story, LEED Silver certified apartment building on a 1.24 acre site. The building contains 357 units and luxurious amenities including a rooftop swimming pool, fitness center and cyber café. The property is currently 95 percent occupied.
 
By contrast, the oldest property in the portfolio is Kent Village Apartments in Landover, Md.  Originally completely in 1949, the community is an 810-unit garden and townhome style property consisting of 84 buildings on a 45.518-acre site.  In recent years, the majority of units have been fully renovated including new kitchens, bathrooms, flooring and fixtures.  The property is currently 96 percent occupied.
 
“Getting a deal of this size and complexity done with all the diverse parties that were involved (intact and breathing at the end) is a truly Herculean accomplishment on the part of the Berkadia team and Freddie Mac,” said Hillman.