The loan gives the borrower interest-only payments on 736 units in four properties for the first 10 years of the 30-year mortgage.
The funding is through Freddie Mac's AAA-rated, variable-rate bond credit enhancement program. The deal replaces the previously fixed (7.15%), privately placed tax-exempt bonds that were not fully paid. The effective interest rate is expected to be under 7%, but Freddie Mac didn't disclose that number, according to a prepared statement from Collateral.
"The interest rate is adjustable, as the AAA-rated bonds are re-marketed weekly to determine the applicable payments from the borrower," says Collateral senior real estate analyst Todd Elkins.
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