Oak Grove Capital announced arranging a unique $82 million Fannie Mae loan to refinance a mixed-income high-rise in Manhattan.

C.W. Early, vice president of the firm’s affordable housing group, worked with borrower Atlantic Development on the transaction.

The deal stands out because of its terms, according to Early.

To refinance 33 West End Avenue Apartments, he originated a Fannie Mae Structured ARM (adjustable rate mortgage) loan. The floating-rate loan has an unusual 20-year term, with a 35-year amortization following one year interest only and a one-year lockout.

Structured ARM loans typically have 7-year or 10-year terms, according to Early, who calls the financing “the first of its kind with Fannie Mae.”

“The reason we did a 20-year structure is because the property receives a 421A tax exemption,” says Early. “The tax exemption in New York burns off over a 20-year term.”

Under the program, properties are fully exempt early in the term, with the exemption decreasing and taxes increasing during the second half.

“We wanted to build a structure that would allow for the property to transition through the tax exemption burnoff,” Early says. “Here the taxes would begin increasing in approximately year four, and the structure allows the property to fully transition during the burnoff and afterwards without having to face a balloon payment,” Early says.

While the loan provides a long-term solution, it is also still flexible enough that the owner can sell the property or refinance after the one-year lockout.

Structured ARM loans are very popular, but the “bells and whistles here were unique,” Early says.

The move allowed Atlantic to refinance a fixed-rate bond execution and obtain a favorable interest rate, with a spread to LIBOR of well under 2%, according to Early.

The 211-unit mixed-income development features 100 low- to moderate-income units. There are seven units set aside for tenants with household incomes no greater than 40% of the area median income (AMI), 36 units set-aside for tenants with household incomes no greater than 50% of the AMI, and 57 units for tenants with household incomes no greater than 165% of AMI.  The remaining apartments are market rate.

Atlantic developed the 25-story property in 2007.