Massive Freddie Mac loan reflects strength of multifamily

Even by institutional standards, it’s a big deal

“As it relates to both KeyBank and Freddie Mac, we do participate in very large transactions because of the institutional investors we work with, but for both of us that is still a very large transaction,” Black said. “There are probably just a handful of deals of that size that get done a year.”

He alluded to the attractive terms of the deal: “I would tell you that these were really best-in-class terms for an incredibly strong sponsor,” he said. REITs in general are able to secure favorable terms, he added: “Real estate investment trusts tend to be larger holding companies, so they tend to have larger portfolios,” he explained. “And they tend to be lower leveraged, which allows them to borrow at such attractive terms.” 

The deal from the REIT’s perspective

He explained the transaction from NexPoint’s perspective: “The deal represents a meaningful component of NexPoint’s outstanding debt, and it was important for them to address some upcoming maturities with some very attractive loan terms at a very uncertain time – which was the fourth quarter.”

In a separate prepared statement, NexPoint officials agreed with the assessment: “Holistically, these refinancings are expected to reduce NXRT’s weighted average interest rate on total debt by 12bps to 5.35%, before the impact of interest rate swap contracts,” officials explained. “Accounting for the hedging impact of the swaps, NXRT’s adjusted weighted average interest rate is expected to be reduced from 3.40% to 3.25%.”

With the completion of these refinancings, NexPoint has no meaningful debt maturities until 2025, officials added. The company also executed a new loan application to refinance a 20th property level mortgage, with an expected closing date in January 2023, which is expected to further improve the company’s weighted average debt maturity and cost of capital, officials added.