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Freddie Mac Acquisition Rehabilitation Mortgage Offers Winning Results
Johnson Capital was one of our first Seller/Servicers to benefit from the Freddie Mac Acquisition Rehabilitation MortgageSM product. We provided $135 million in financing through this product, which enabled the repeat borrower to rehabilitate the 914-unit Windsor Gardens Apartments in Norwood, Mass. Maximizing Cashflow Through Upfront Financing"The Freddie Mac Acquisition Rehabilitation Mortgage enabled Johnson Capital to provide a valued client a well-structured loan product that was consistent with Freddie Mac's mission and the borrower's real estate finance needs on a multifamily acquisition they intended to rehabilitate," said Martin Fayer, senior vice president and principal of Johnson Capital. The borrower was pleased with the product, since it allowed it to fix the loan's interest at competitive rates, while giving the company additional proceeds to help facilitate the completion of the rehabilitation plan it had committed to when it purchased the asset.The borrower also benefited from the Freddie Mac Early Rate-Lock delivery option, choosing to wait 90 days after rate-lock until Freddie Mac's purchase of the loan. Improved Positioning of PropertyFor a multifamily borrower who typically looks to reposition multifamily assets with moderate to extensive interior and exterior renovations, the Freddie Mac Acquisition Upgrade and Acquisition Rehabilitation products provide a viable alternative to secure a loan, which takes into consideration the net operating income the multifamily property will generate post rehabilitation. "This product is a win-win since it provides the borrower with a way to appropriately finance a portion of the total capital commitment of the rehabilitation, while simultaneously providing the rental consumer upgraded existing housing at reasonable rental levels," Fayer added. The proposed capital improvements to Windsor Gardens consist of adding washers and dryers to the garden-style units, new countertops, cabinet faces and knobs, tubs, shower surrounds, toilets, ceramic flooring, lighting package, plumbing fixture package, six panel doors and new door hardware, new bathroom components and accessories, and smoke detection. Improvements will be made with minimal tenant displacement. View the term sheets for the Freddie Mac Acquisition Rehabilitation Mortgage and the Freddie Mac Acquisition Upgrade Mortgage.
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