INSIDE THE DEAL: Fannie Mae Supplemental Loan Funds Construction of New Units at Existing Property
- Jan 06, 2009
By Keat Foong, Executive Editor Wichita, Kansas—What does a borrower do when bank financing is not available? In the case of Windemere at Tall Grass in Wichita, Kansas, it turned to Fannie Mae supplemental financing originated by Centerline Capital Group. According to Centerline, the borrower originally wanted to obtain an unsecured construction loan to fund the construction of additional units at the property, but bank financing was not available. So it turned to Centerline, which provided a $1 million supplemental loan with Fannie Mae. The money will fund the construction of up to 22 new units at Windemere at Tall Grass. Centerline had already provided a first mortgage of $8.9 million for the property in 2008. The borrower then turned to Centerline “to investigate allowing a supplemental loan” for the new construction, according to Centerline. It helps that the officer in charge had also worked on the first deal. Bryan Cullen, senior vice president in Centerline’s Commercial Real Estate Group in its Washington D.C. office, who originated the first-mortgage, first secured the necessary Fannie Mae approvals to allow for new construction on the site. Then he secured the nearly $1 million supplemental loan. “The generally robust local Wichita economy was another selling point to Fannie Mae and Centerline. We are facilitating housing construction for a growing local economy and local population affordable to middle-income tenants,” said Cullen.Windemere was built in 1992 as the 204-unit first-phase of a two phase development. Windemere apartments all have full size washers and dryers; and the complex has two swimming pools. Garage parking is also available to residents. According to a recently released real estate market overview, Wichita metropolitan apartment owners reported robust occupancy gains in the second quarter of 2008, with an occupancy rate that improved to over 92 percent, reflecting a year-over-year gain of 210 basis points.Centerline says this is the first time to its knowledge that this type of transaction has been accomplished with a Fannie Mae first mortgage.