FREDDIE MAC PURCHASE OF MORTGAGES FROM GMAC COMMERCIAL MORTGAGE ENABLES BORROWER TO FINANCE 12 SUNRISE SENIOR LIVING FACILITIES

McLean, VA – Freddie Mac announced that it has recently purchased a pool of mortgages totaling $162.4 million from GMAC Commercial Mortgage, which enabled the borrower to finance a dozen Sunrise senior living facilities throughout the eastern, western, and central U.S. The borrower took advantage of the cost savings and smooth execution provided by Freddie Mac’s Capped ARM program through GMACCM.

The seven-year Capped ARM has no yield maintenance, and the borrower can prepay at any time. The prepayment premium is three percent in the first year; two percent in the second; and one percent thereafter. The one percent prepayment is waived after the third year if the loan is refinanced with a fixed rate loan purchased by Freddie Mac. The facilities are being operated under a long-term lease arrangement with Sunrise Senior Living, the facilities’ developer.

“The borrower is a joint venture between a seniors housing operator and an institutional investor. Freddie’s seven-year Capped ARM was the perfect financing structure offering flexible prepayment features and attractive pricing. Between the time the quote was made and the time the deal was committed, short-term interest rates increased substantially – Freddie held its spread. Furthermore, the extraordinary efforts of Freddie’s Legal team helped ensure that the deal was able to close one week after receiving committee approval. The borrower was pleased,” said Philip Brooks, GMACCM senior vice president.

“We’re delighted that Freddie Mac’s Capped ARM met the borrower’s business needs. And it’s always wonderful to have a great partner like GMACCM, who helped shepherd them through the benefits and flexibility of the Capped ARM,” said Margaret Scott, Freddie Mac’s director of Conventional Products and Seniors Housing.

The Freddie Mac Capped ARM allows for a floating-rate for the full term with a maximum interest rate. The cost of capping the interest rate is financed by Freddie Mac as part of the spread. Since Freddie Mac provides the cap protection, the purchase of a third-party interest-rate cap is not required, which eliminates third-party transaction fees, agreements, and negotiations.

Since the introduction of the Freddie Mac Program Plus network of multifamily loan originators and servicers in 1993, Freddie Mac has provided financing for over 40,000 multifamily properties totaling more than $100 billion.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and nearly four million renters.

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