Collateral Real Estate Capital Provides $725M Credit Facility, Largest Fannie Mae Deal of its...

Collateral Real Estate Capital L.L.C. said today it has provided a $725 million credit facility commitment, the largest transaction of its type financed by Fannie Mae, to a joint venture between an unnamed institutional capital partner and Health Care Property Investors Inc.

The release from Birmingham, Ala.-based Collateral provides a closer look at the details of the HCP joint venture, first reported Jan. 8 by CPN. The facility was funded at $686 million and consists of 20 cross-collateralized first mortgage loans, with cross-default provisions and five additional properties. It allows for additions, substitutions and release of properties during the loan period, according to Collateral.

"This transaction involved the assumption, borrow-up and addition of assets to an existing credit facility," Scott Kavel, Collateral managing director, noted in the release. "HCP purchased the assets and assumed the existing credit facility through its acquisition of CNL Retirement Properties Inc. The fixed-rate debt facility bears an interest rate at a weighted average of 5.66 percent."

Kavel, bassed in Collateral's Norcross, Ga., office, described the credit facility as "highly functional and stylized."

Richard Thomas, a Collateral director who worked with Kavel on the deal,
told CPN today that "it is really the tailoring that makes the loan so special."

Thomas added that the deal represents "the strong lender/investor
interest in the seniors housing product type as well as the fact that this is a
credit facility, whereby the borrower could look to add properties whenever
they are ready to."

The portfolio is secured by senior housing facilities located in Arizona, California, Florida, Illinois, Rhode Island and Texas with a total of 5,628 units. The facilities became part of HCP's portfolio last October when it acquired CNL Retirement Properties for $5.3 billion. CPN noted in its Jan. 8 report that the joint venture partner was investing $280 million in the transaction, with the remainder coming from the expanded Fannie Mae facility.

Collateral, which provides debt and equity capital, has a current service portfolio worth more than $9.2 billion. Last year, it had an annual production of more than $5 billion. Nearly half of its transactions are in multifamily real estate with about 20 percent in office and 17.8 percent in retail. During 2006, Collateral's seniors housing group completed 27 loan transactions worth $1.03 billion, including the HCP credit facility, which closed in late December. Thomas said that represented 20 percent of Collateral's loan production for the year.