shopping for a merger partner,
GlobeSt.com has confirmed through Deutsche Bank Berkshire Mortgage that the prized asset was unencumbered and represented Post's first loan from Freddie Mac. Because it was a first with Freddie, the bank's spokesman says it took awhile to negotiate. Deutsche Bank's mortgage banker wasn't available for an interview about the Post deal, which apparently was inked awhile ago and kept as low profile as possible. Situated at 5009 Addison Circle, Post Addison Circle contains 1,334 apartments, 41,000 sf of office, 108,725 sf of retail and a 234-unit self-storage facility. According to Post's SEC filings, the apartments' economic occupancy is 94.6%.
In setting up the loan, Post created a special-purpose entity, Post Addison Circle LP, and transferred the deeds at the end of January, based on information from Dallas Central Appraisal District. The county has a $125.29-million assessment levied against the high-profile development.
"Freddie Mac remains an excellent source of mortgage capital in this volatile market," Kip Kimble, a director for the New York City-based Deutsche Bank, says in yesterday's press release about the interest-only financing. "We were able to deliver a creative, highly structured and flexible financing package that best addressed the borrower's needs."
A Post analyst points out that only highly qualified borrowers, like the Atlanta REIT, have been able to get Freddie Mac and Fannie Mae financing in today's topsy-turvy capital markets. The analyst adds it's also highly likely that the strategy was a tool for additional fuel for Post's $1.3-billion construction and pre-development pipeline.
Post has six apartment complexes, one expansion and two condo projects under construction, creating a $585.6-million pipeline. It also has land in pre-development stages for another 3,312 apartments and about 198,000 of retail, equaling an estimated $750 million of construction costs.
In its SEC filing, Post reported interest expense would be lower this year due to increased interest capitalization resulting from its developments, lower debt levels and lower interest rates on its variable-rate, unsecured debt. Post reported proceeds from the $120-million loan went to repay the variable rate, unsecured debt.
[IMGCAP(2)]Post Addison Circle is collateral for a seven-year fixed-rate loan, with an automatic one-year extension at a floating rate. In its earnings release, Post reported interest was fixed at 4.88% and the floater priced at 168 basis points over the US Treasury rate.
Post Addison Circle's 10 buildings were built between 1998 and 2000. The package represents roughly one-third of Post's existing 3,464-unit portfolio in Dallas, but it does have at least two projects in its pipeline.
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