Who says debt markets are in crisis? Not multifamily operators seeking loans backed by government lenders Fannie Mae and Freddie Mac. “Freddie and Fannie are not capital-constrained; I sense no concern with getting funding on their part,” says Mark Parrell, executive vice president and CFO of Chicago-based Equity Residential. In March, the REIT landed a $500 million secured loan from Wachovia Multifamily Capital for repurchase by Freddie Mac.

Equity looks to be judged on the performance of assets such as Longview Place in Waltham, Mass.
Equity Residential Equity looks to be judged on the performance of assets such as Longview Place in Waltham, Mass.

The 11.5-year term loan has an effective interest rate of 5.48 percent and will help pay down loan maturities due in 2008. In addition, Equity has $1.4 billion in revolving credit, which puts Equity in solid financial shape. “We pride ourselves on having a fortress-like balance sheet,” Parrell says. “A lot of real estate companies right now are looking between the sofa cushions for dollars to pay debt down. We're not one of those guys.” Finance experts say that Fannie and Freddie are vital to providing liquidity to multifamily financial markets today, but the entities are taking a harder look at securing the loans they purchase. “Asset quality is vitally important. The strong supply of borrowers has given the active lenders the ability to pick and choose more selectively,” says Mike Brown, managing director of Boca Raton, Fla.-based Meridian Capital Group.

Parrell, for one, wouldn't mind more eyes looking at Equity's apartment assets. “We [can] trade on our fundamentals and not on questions of where we are going to get money to pay down our debt.”