At the time the deal went to market, the communities were in various stages of construction, says Cary Abod, the locally based Holiday Fenoglio Fowler LLC director who helped broker the deal for the borrower--with executive managing director Jody Thornton and associate director John Ahmed, based in Dallas. After it got acquired by Tishman Speyer and Lehman Brothers, Archstone obtained additional financing. When it was a REIT, the development capital came from its internally funded credit facilities, explains Abod. "When it was taken private, the capitalization structure changed."

The communities were originally part of a five-property portfolio the HFF team took out to market to obtain a straight construction loan, according to Abod. "We wanted to have a single lending source for the five properties, but the market didn't let us do that," he says. "We ended up splitting the portfolio up, and TIAA had a construction-to-perm program where we could do it all in house. It was sort of a one-stop-shop."

Because TIAA wanted to keep the loan on its books for some time, as opposed to doing a straight construction loan, the firms had to get creative. "We were able to get Archstone and TIAA to see eye to eye, and worked some flexible prepayment into the deal," Abod relates. "It was a bit of trying to fit a square peg into a round hole, but they both got something they wanted, which was flexibility and a single source for an execution." If Archstone wanted to sell one of the assets, he adds, it has the freedom to do so.

The transaction took about six months, from conception to close. That, says Abod, is a function of the market. Plus, Archstone's requirements narrowed the already-tight field of candidates. TIAA, says the executive, "was the best option if we only wanted to have one lender in the project. We could have broken these properties into individual loans and done it at a bank level, but we wanted a one-stop shop. Since they're all similar, garden-style projects with the same contractor and same local development team, it was an easy transition."

Capital certainly remains tight, says Abod, but there are sources still funding new construction projects. "The life companies are out there, it's getting done at the bank level, it's getting done with recourse, and it's getting done with lender commitments of $35 million, depending on the size of the bank," he says.

And while a lot has been said about Fannie Mae and Freddie Mac, which have become the go-to sources for traditional financing, those lenders don't really play in the development arena. "They've always been hard, cash-flow lenders," says Abod. "They can finance a stabilized property very well, but they don't want to take the risk of construction and leasing up a project."

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