BWE Arranges $100M Freddie Mac Financing

The line of credit backs 2,500 manufactured units.

An example of manufactured housing communities in the portfolio. Image courtesy of BWE

BWE’s manufactured housing team has secured upwards of $100 million in financing through a Freddie Mac transitional line of credit. The debt will back a portfolio of 2,500 manufactured housing communities in the Midwest, the southeastern U.S. and the Rocky Mountain region.

M.J. Vukovich, executive vice president in BWE’s Denver office, Ghazy Grijalva, vice president in BWE’s Chicago office, and Andrew Capra, assistant vice president in the Denver office, arranged the $150 million transitional line of credit through Freddie Mac’s Optigo channel. The owner could not immediately be identified, though BWE disclosed that they were a longtime client.

The team sourced a $14 million traditional bank loan for the borrower from a lender that specializes in manufactured housing. No additional details about the bank loan could immediately be learned.

BWE structured the TLOC as a full-term, interest-only loan with a floating rate. The terms also included interest rate caps to hedge against the risk of increasing rates, while also positioning the client to take advantage of a declining rate environment later this year and provide flexibility for asset exit. The transitional line of credit provides a solution for manufactured housing communities that require more repairs and renovations before securing permanent financing terms or more flexibility in their hold period. By initially using $100 million of the $150 million, the borrower has the ability to shape their portfolio ore thoroughly by adding more new properties in the future.

Vukovich called the Freddie Mac TLOC a powerful financing tool for portfolios that are on the fringe of eligibility for permanent financing, giving borrowers the resources to complete repairs, increase occupancy and bring properties to market rate before taking on permanent debt.

Vukovich, an expert on manufactured housing, advised the Biden administration on its Housing Supply Action program. The plan addressed the need to encourage development of more low-cost housing options, including two-to-four-unit properties, tiny houses, accessory units, manufactured and modular housing. The administration is taking steps to offer more access to lower cost financing to manufacturers and those buying manufactured homes.

Last month, the federal government issued updates to the housing supply plan with new actions that the administration hopes will create tens of thousands of affordable homes, including boosting the supply and affordability of manufactured homes. The U.S. Department of Housing and Urban Development has announced $225 million in funding for grants that can be used to replace dilapidated homes, assist homeowners with repairs, upgrades and accessibility modifications and improve the infrastructure of storm water systems or other utilities.

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