Award of Excellence
Best of the Best Transaction

Project Team

Southern Management Corporation
Chatham Financial
Chicago Title, NCS, DC
Fannie Mae
Fidelity National Title, NCS, DC
Hillman & Glorioso PLLC
L&L Advisors
Toole Katz & Roemersma, LLP
Venable LLP
Walker & Dunlop
Walsh, Colucci, Lubeley & Walsh
Womble, Bond Dickinson

Executive Summary

We were awarded this deal after a very competitive process with the industries top lenders, and made our final pitch with an all-star team, including our CEO. This displayed commitment helped us win the transaction over our three largest competitors, one of whom had this debt on their books for decades. It was that same drive and tenacity demonstrated by the team during the initial pitch that was instrumental in carrying this large and complex transaction across the finish line.

We canvassed the market and structured multiple competitive proposals, and the borrower, Southern Management Corporation (SMC), ultimately selected a $2.4 billion Fannie Mae credit facility. SMC is the largest privately-owned residential property-management company in the Mid-Atlantic region and provides significant resident, community, and social services for their residents, including educational scholarships, professional mentorship programs, and various fundraisers.

The portfolio consisted of 67 multifamily properties containing 22,439 units located throughout the Washington, D.C. metropolitan area. The properties were built between 1949 and 2007 and have been long-term SMC assets, with an average acquisition date of 1985. Over the past three years, the properties have maintained an average occupancy of 97% across the portfolio.

The refinancing allowed SMC to maintain the affordable aspect of the workforce housing portfolio, which is critically important in today’s environment. Over 60% of the portfolio units qualify as mission-driven, affordable housing under Federal Housing Finance Agency (FHFA) guidelines and 95% of the units are considered “workforce housing”, at 80% of area median income – providing thousands of affordable units that will now become consistent, long-term stock in such a major MSA.

Fannie Mae’s Executive Vice President of Multifamily added, “At Fannie Mae we are committed to the development and preservation of affordable housing for America's communities. This transaction gave us the opportunity to partner with one of our top DUS lenders, using the credit facility, one of our most flexible financing products, to structure a winning solution for the borrower while delivering affordability to the Washington, D.C., market."

SMC previously had a single maturity date in 2022 for its roughly $1.5B of loans on the portfolio, a structure that created unnecessary risk. The timing for this transaction was ideal, because interest rates were low and Fannie Mae had plenty of lending capacity left under the terms of its $100B loan purchase caps through 2020, giving them the ability to make large commitments.

Discussions around the deal began in late 2019, and the terms were initially agreed upon before COVID-19 spurred an economic crisis, but not finalized. We had to underwrite the properties, structure the credit facilities, price the loans, and close the deal in the midst of a pandemic, but despite major market volatility and averse conditions, all parties honored their commitments to get the job done.

The President and CEO of SMC commented that our “creativity, tenacity, and market knowledge resulted in a superior execution for this large and complex transaction amidst the uncertainty of a rapidly unfolding financial and health crisis. The effort, skill, expertise, and responsiveness of all parties involved was unprecedented.

"We are honored to have been involved in the milestone transaction that the SMC Portfolio represents. The long-term, positive impact on the community, the creative problem-solving, the ability to create new partnerships, and the dedication of all parties involved were an inspiration to our team.