(To read more on the multifamily market and the debt and equity markets, click here.)
NEW YORK CITY-A joint venture of CharterMac and IXIS Capital has formed Centerbrook Financial. The firm provides credit intermediation products, including credit default swaps, to the affordable housing finance industry.
Centerbrook entered into senior and mezzanine debt facilities and has commitments for $155 million from four financial institutions. Concurrently with the launch, Centerbrook completed its first transaction, providing a pool of credit default swaps in connection with the resecuritization of $820 million of CharterMac's existing multifamily revenue bonds.
"This transaction represents only the initial phase of our credit intermediation business," says Marc D. Schnitzer, chief executive officer and president of CharterMac. "Our ownership of Centerbrook will enable us to retain a significant portion of the fees that we would have paid to third party credit providers." CharterMac paid third party credit providers over $13.5 million of fees in 2005.
Schnitzer explains that with the first transaction, CharterMac was paying third-party credit providers 47.9 basis points in credit intermediation fees on an annual basis. "We will now capture 38% of those fees in Centerbrook, resulting in $1.5 million of annual savings."
The pair has been working together since 2004. To date, IXIS has provided approximately $909.8 million of credit intermediation for CharterMac. Centerbrook Holdings LLC is 90% owned by a subsidiary of CharterMac and 10% owned by IXIS. Earlier this month, CharterMac announced its intention to become a real estate fund manager by inking a deal to acquire ARCap with its $2.8 billion-plus in CMBS.
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