A Billion-Dollar Week for AvalonBay

It seems apartment complex developer AvalonBay Communities Inc. is having little trouble getting its hands on capital of late. Just a week after closing a $400 million investment fund, the firm secured $741.1 million under a series of mortgage loans. AvalonBay on Wednesday entered into the mortgage loan commitment with Deutsche Bank Berkshire Mortgage Inc., on behalf of Freddie Mac. The $741.1 million in financing represents the total from 14 separate mortgage loans, each secured by one of AvalonBay’s apartment communities. The loans are scheduled to close no later than April 17, with interest fixed at 5.86 percent for 10 years. The firm will use the proceeds from the loans to pay down debt under its unsecured credit facility, securities and other maturing debt, as well as to fund current development and re-development. The Alexandria, Va.-based firm, which has ownership stakes in some 178 multi-family properties as of the end of last year, said in December that it would curtail its planned development pipeline in the face of the sinking economy and commercial property slowdown. On the investment front, however, AvalonBay has plenty in its coffers to take advantage of declining prices in the market. Last week, the firm closed an investment fund with total equity commitments of $400 million, $125 million of which was funded by AvalonBay itself, with the remainder coming from institutional investors. With leverage, the fund can make up to about $1.1 billion in investments, most of which will be on properties in high barrier-to-entry markets in the Northeast, mid-Atlantic, Midwest and West Coast, the firm said. The investment period will last until August 2011, or until 90 percent of its capital has been invested. Since the deflation of commercial property values over the past year or so, many investors with cash to spend have made plans to get in on the action while bargains can be had as owners face financing woes and buyer competition is limited by the credit crunch.