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Palo Alto, California—May 7, 2007—Essex Property Financial Corporation (EPFC), a division of Essex Property Trust, Inc (NYSE:ESS) and a provider of debt and equity capital for real estate in the Western United States, announced today that it funded a $6.9-million mezzanine loan for the acquisition of California Hill, a 153-unit, age-restricted apartment community located in Concord, California. The loan was provided to Chateau Senior Living Apartment Associates, LLC, a joint venture between affiliates of Carlton Senior Living Communities and Piedmont Properties. As part of the acquisition, the joint venture assumed approximately $8.9 million of existing financing, consisting of tax-exempt and taxable bond financing, credit-enhanced by Fannie Mae (FNMA), as well as secondary financing provided by Fannie Mae. Centerline Capital Group (formerly CharterMac) will continue to provide loan servicing and oversight for the senior debt pieces.
California Hill, originally developed in 1991, is an age-restricted community for active seniors 55 years of age and older. The buyer intends to re-brand the asset under the "Chateau" label of properties owned and operated by affiliates of Piedmont and Carlton Senior Living. The mezzanine loan structure provided capital to acquire the property as well as fund capital improvements. The property is located within easy access to major freeways and BART.
"California Hill is an excellent example of the type of transaction Essex Property Financial Corporation seeks to finance," stated Michael VanderLey, Senior Vice President of Structured Finance for the Company. Mr. VanderLey continued, "The property's excellent location in a supply-constrained submarket coupled with Carlton Senior Living's track record and the joint venture's business plan were elements we found compelling. Our ability to layer mezzanine financing on top of the low-leverage senior debt allowed the Carlton/Piedmont joint venture to own 100 percent of the project economics at a favorable all-in cost of capital." Mr. VanderLey added, "Finally, we were excited by the opportunity to work with FNMA and Centerline on this project. EPFC is among a handful of non-DUS lenders approved by FNMA to provide mezzanine capital behind bonds that they credit-enhance. We look forward to working with FNMA on future mezzanine transactions."
The floating rate, LIBOR-based Mezzanine Loan was structured with fixed payment rates during the first three years of the term. The loan, which leveraged the project to approximately 85 percent of cost, has a term of 48 months with one, 12-month extension option. Closing occurred on March 29, 2007.