Leon N. Weiner & Associates, Inc. (LNWA), a long-established PNC client, and their equity partner were both new to Freddie Mac’s market rate requirements when an opportunity arose for an out-of-the box transaction. The client turned to PNC due to the team’s experience with Freddie Mac and the bank’s commitment to stand with them from the land purchase to a permanent loan on the property, Emblem at Christiana. PNC’s knowledge and experience with the property during the construction loan phase helped expedite the processing of the Freddie Mac permanent application.
By using Freddie’s lease-up or pre-stabilization loan execution, the client was able to lock their Treasury rate and then their full interest rate prior to property stabilization, eliminating much of the risk posed by today’s unpredictable interest rate environment.
NV Capital Advisors is the managing member of NV Emblem LLC, and a co-manager of Emblem. NV Capital Advisors, a private equity company, based in Tysons, Virginia, raises and invests capital in real estate projects throughout the mid-Atlantic area, including 10 projects since 2012. These include condos, apartments, commercial and land.
Its principals are also owners of NV Commercial, a development company since 1984.
LNWA is an experienced developer of affordable housing and hotels. Since 1949 the company has developed more than 90 properties with more than 10,000 units of housing for low-to-moderate income families. LNWA has been a client of PNC and the bank’s predecessor companies since 1951.
Because the Emblem was the client’s first market-rate property, the opportunities offered by a Freddie Mac deal presented fresh challenges.
The green-certified property is located near the Christiana Mall and Christiana Hospital and Christiana Care Health System, and provides housing for workers in each of these employment centers. Other top employers near the property include DuPont and major banks. As a result, there’s a sizeable demand for the property’s rental units, achieving 95% occupancy in less than a year.
PNC’s ability to lock in the Treasury rate within five days of application and well ahead of stabilization was a key aspect of the deal. The client was also looking for maximum cash-out, a competitive spread and maximum IO.
PNC delivered a Freddie Mac lease-up program with a 120-day early rate lock for an 11-year fixed rate loan when the Emblem had at least 50% occupancy and was performing with at least a 1.05x DSCR. The loan includes five years of interest only.
Kevin Kelly, Managing Principal of LNWA, talked about PNC’s performance. “PNC was committed to stay in the deal, monitor the process personally to the end. We’ve enjoyed the ability to discuss our requirements frankly with PNC. They listen and understand our needs. They’ve been flexible and creative.”
Date: September 2017
Location: Newark, Delaware
Financing Amount: $37.6 million
Financing Type: Freddie Mac Lease-Up Refinance
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