Kairos Secures $175M Fannie Mae Loan to Grow Affordable Housing

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Kairos Investment Management Company (KIMC) has secured a $175 million credit facility backed by Fannie Mae (FNMA), the real estate firm announced Friday.

Berkadia — which is a joint venture of Berkshire Hathaway (BRK.A) and Jefferies Financial Group — originated and will service the credit facility for each transaction. 

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The 20-year loan term enables KIMC to close different loan tranches with varying maturities. By combining fixed- and floating-rate tranches, the facility also allows more flexibility when it comes to interest rate management, as well as the ability to add or remove different assets to the collateral pool without incurring prepayment penalties.

“In a high inflationary and rising interest rate environment with recession looming, we are well positioned and anticipate seeing many opportunistic multifamily, affordable housing acquisition opportunities,” Carl Chang, CEO and founder of KIMC, said in a statement. “In fact, we are taking this opportunity to grow this component of our portfolio as we see valuations pull back from all-time highs, and the credit facility from Fannie Mae provides Kairos additional leverage and excellent flexibility with a lower cost of capital to do so.”

U.S. multifamily demand remains strong after the first quarter. The collapse of several banks raised uncertainty in the financial markets, but multifamily fundamentals remain stable, with occupancy staying flat during the first three months, according to a recent report from Yardi Matrix. Average national rents rose $3 in March to $1,706 a month, a 4 percent increase compared to the same period last year.

Based in Rancho Santa Margarita in Orange County, Calif., KIMC manages investments nationwide and across multiple asset classes valued at more than $4.1 billion, including more than 21.1 million square feet and more than 24,277 multifamily units.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.