FREDDIE MAC CAPPED ARM FUNDS $85 MILLION SENIORS HOUSING PORTFOLIO

Innovations Like Capped ARM Financing Help Freddie Mac Achieve Record Seniors Housing Commitment Volume in 2003

McLean, VA – Freddie Mac recently purchased a portfolio of mortgages from Holliday Fenoglio Fowler/Lend Lease Mortgage Capital that enabled a new Freddie Mac borrower to finance eight seniors housing campuses located throughout Pennsylvania. The borrower, a family-owned seniors housing company that owns and operates 31 seniors housing facilities in Pennsylvania and Maryland, took advantage of the cost savings and smooth execution provided by Freddie Mac's new Capped ARM.

"By choosing a Freddie Mac Capped ARM to finance their seniors housing portfolio, the borrower was able to achieve what is perhaps the lowest cost of capital available in the seniors housing market," said Jack Killough of Holliday Fenoglio Fowler. "The borrower also appreciated the convenience and time savings afforded by the built-in interest-rate cap that is a feature of Freddie Mac's Capped ARM product."

The eight cross-collateralized and cross-defaulted mortgages have an interest rate based on the 30-day Freddie Mac Reference Bill^® index, which historically has traded at a discount relative to LIBOR. Not only was the borrower able to take advantage of the lower short-term rate, but the borrower also has the longer-term certainty provided by an established maximum interest rate.

Each of the eight mortgages that make up the $85 million portfolio has a 10-year term and 25-year amortization period. In total, the eight seniors housing campuses comprise over 1,600 units spread over 25 buildings. The units are a mix of independent-living, assisted-living, dementia and skilled-nursing units.

"Working together with Freddie Mac, we were able to underwrite and provide a smooth execution of this complex portfolio transaction, which involved getting comfortable with the broad spectrum of resident-care levels available at each property," said Chris Tawa of Wachovia Multifamily Capital. "The borrower quickly realized the advantages of Freddie Mac's Capped ARM financing and was so impressed with the execution that they are planning to finance a ninth seniors housing property with Holliday Fenoglio Fowler/Wachovia Multifamily Capital and Freddie Mac." After Freddie Mac purchased the loans from Lend Lease Mortgage Capital, Lend Lease became part of what is now Wachovia Multifamily Capital.

"We committed a record volume of seniors housing business in 2003, more than $500 million, due to our flexibility, experience in the market and ability to offer innovative executions like Capped ARMs," said Margaret Scott, director of conventional products and seniors housing in Freddie Mac's Multifamily Division.

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 30,000 multifamily properties totaling more than $75 billion. That volume represents more than two million rental units across the country, a large portion of which are affordable to people whose income levels are at or below area median income - including newly established households, single-parent households, large family households at lower salaries as well as other renters.

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 opened the doors for one in six homebuyers.

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