Berkadia Funds $1.5B M-F Portfolio in Baltimore-D.C. Area

By Scott Baltic, Contributing Editor

Berkadia Commercial Mortgage L.L.C. has closed a $1.5 billion loan portfolio through Freddie Mac for Southern Management Corp., of Vienna, Va., Berkadia announced Friday. The borrower is the Mid-Atlantic region’s largest privately owned residential property management company.

The portfolio, originated by John M.R. Reed, senior vice president at Berkadia’s Richmond, Va., office, is made up of loans ranging from $2.5 million to $135 million on 69 multi-family assets. The individual loans were closed in stages from December to Jan. 11, Commercial Property Executive has learned.

The underlying properties represent the vast majority of Southern Management’s assets, which total 74 apartment communities and more than 25,000 apartment units.

The deal is the largest loan funding in Berkadia’s history and reportedly is also expected to be Freddie Mac’s largest multi-family deal eligible for securitization to date through its Capital Markets Execution program.

Southern Management’s chairman and CEO, David H. Hillman, was the transaction’s sponsor. Troutman Sanders served as lender counsel.

“The multi-family market continues to perform well in response to the slow recovery of the residential real estate sector,” Reed told CPE. “Refinancing these properties now allows the borrower to lock in the market’s favorable current interest rates.”

The properties are mostly Class A and B and are spread across Maryland and northern Virginia. The communities are a mix of garden, mid-rise and high-rise buildings ranging from 53 to 1,402 units, containing more than 23,000 total apartment units and more than 250,000 square feet of office and retail space.

The portfolio’s newest property is Palisades of Towson in Towson, Md., developed by Southern Management in 2010. The Class A+ property is an 18-story, LEED Silver–certified building with 357 apartment units and amenities that include a rooftop swimming pool, fitness center and cyber café. It’s currently 95 percent occupied.

The oldest property is Kent Village Apartments in Landover, Md. Originally completed in 1949, it’s an 810-unit garden- and townhome-style property consisting of 84 buildings on a 45.5-acre site.  In recent years, the majority of units have been fully renovated, including new kitchens, bathrooms, flooring and fixtures. The community is currently 96 percent occupied.