Flournoy Development Company

Transaction Overview
Transaction Type: Commercial Mortgage Backed Securitization
Total Transaction Size: $56.8 Million

Transaction Background
CBA was retained by Flournoy Development Company (FDC) to provide permanent financing for newly constructed garden apartment properties which are 100% reserved for low income tenants under the Section 42 Low-Income Housing Tax Credit (LIHTC) program. With a portfolio of approximately 13,000 units, FDC is one of the largest developers and managers of conventional and affordable multi-family properties in the nation.

Prior to this transaction, Cheslock and Bakker provided $57 million of permanent financing for 23 of FDC's LIHTC properties in September 1992. The transaction had to be completed under severe time constraints because FDC's primary construction lender had reached its legal lending limit and was therefore forced to temporarily stop providing FDC with construction financing. The transaction was completed in 60 days and was the first-ever securitization of Section 42 mortgages.

Transaction Summary
CBA provided a $60 million forward commitment to provide permanent financing for 13 newly constructed LIHTC projects over a 24 month period. As the projects were completed, CBA funded and then warehoused the loans. Nine mortgages, totaling approximately $40 million, were combined with another tax credit lender's loan portfolio and securitized in a $78 million private placement distributed by CS First Boston in 1995. The remaining $16.8 million mortgages were sold to a third party. This transaction represented the third securitization of Section 42 loans; Stanley Cheslock and Paul Bakker had completed the first such securitization, also for Flournoy, in 1992.