BALTIMORE, MD - MuniMae announced today an agreement to sell its Agency loan operations to Oak Grove Commercial Mortgage, LLC, a newly formed subsidiary of Mud Duck Equities LLC. The two part transaction consists of a $10 million bridge loan from Oak Grove, accompanied by an Acquisition Agreement pursuant to which Oak Grove will acquire the business. Upon closing of the sale, MuniMae will receive $23.5 million in a combination of cash and forgiveness of the loan and, in addition, will receive two series of dividend paying preferred interests in Oak Grove having a combined principal amount of $47 million (subject to reduction of a portion of the preferred interests under some circumstances). MuniMae's Agency business consists of the underwriting and origination of affordable housing and market rate multifamily apartment project loans that are sold to or insured or guaranteed by the government-sponsored enterprises Fannie Mae, Freddie Mac and government agencies HUD/FHA. MuniMae originates and, in most cases, sells the loans to these agencies, and remains engaged as the loan servicer, for which MuniMae is paid a servicing fee.
The loan from Oak Grove was funded on December 18, 2008. Completion of the sale transaction is subject to a number of conditions, including approval by the government-sponsored agencies to which MuniMae sells, or which insure the loans it originates in this aspect of its business. Total MuniMae Agency loan originations in the first three quarters of 2008 were $875 million up from $625 million in the same period in 2007. Michael F. Falcone, Chief Executive Officer stated, "This sale is an important transaction for MuniMae as it provides us with working capital in this difficult operating environment."
Third quarter 2008 production (debt and equity originations) was $349 million, compared to $754 million in the prior year period, due primarily to the impact of the ongoing disruption in the capital markets on our businesses and the Company's decision to curtail business activities. Production in MMA Financial, the Company's affordable housing business, included approximately $29 million in tax credit equity placements, compared to $81 million in the prior year period and $99 million of permanent loan originations, compared with $39 million in the prior year period. MMA Realty Capital production included approximately $120 million in agency originations and approximately $80 million in non-agency originations, compared to $152 million and $259 million, respectively, in the prior year period. Production in the Company's MMA Renewable Ventures unit was $21 million, compared to $44 million in the 2007 period.
Mr. Falcone stated, "Our production numbers continue to reflect the extremely difficult operating environment. As a result of these conditions, we continue to restrict our business activities, conserve our resources and explore strategic alternatives." Consistent with its previous two quarters and the need to conserve capital, the Company will continue the suspension of its quarterly dividend for the third quarter of 2008.
MuniMae and its subsidiaries arrange debt and equity financing for developers and owners of real estate and clean energy projects. Assets under management as of September 30, 2008 exceeded $20.4 billion including investments in over 3,000 properties, containing about 328,000 units in 49 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. MuniMae is organized as a limited liability company, which allows it to combine the limited liability, governance and management characteristics of a corporation with the pass-through tax features of a partnership. MuniMae also conducts activities through wholly owned taxable corporate subsidiaries.
Source: BusinessWire.com