Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has arranged a $49.5 million loan for Centric Apartments, a new multifamily property in Cleveland.
Director Dan Geuther secured the construction loan from Related Fund Management. The deal was completed on December 20.
The borrower was Midwest Development Partners, LLC, based in Shaker Heights, Ohio. The non-recourse construction loan features a three-year, interest only initial term, with two one-year extension options.
“The project–which was several years in the making–will fill a major need in the University Circle market and complete the transformation of a site which is considered by many as the best multifamily location in the city,” said Geuther. “To have a sophisticated lending partner like Related committed to the project says a lot about the strength of the development team and the University Circle market.”
Centric Apartments will be located at 11601 Mayfield Road in University Circle, the city’s arts, educational and medical hub. The property, which is directly adjacent to the Little Italy-University Circle RTA light-rail station, will feature 272-units, 27,000 square feet of commercial space, a 360-space parking garage and two-thirds of an acre of public green space.
Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.
The company is among the top Freddie Mac and Fannie Mae multifamily lenders.
Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.
In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.
The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.
© 2017 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.