Prudential Mortgage Capital Co. said Monday that it has arranged the largest construction loan ever guaranteed by the Federal Housing Administration.
TIAA-CREF agreed to fund the loan by buying a mortgage-backed security whose principal and interest payments would be guaranteed by the Government National Mortgage Association.
The loan will finance a hospital that Capital Health System Inc. is building in Hopewell Township, N.J. The project is expected to be completed in 2011. Some of the proceeds will help fund a $45 million expansion of Capital Health's hospital in nearby Trenton.
"The high-quality, low-risk securities which we will purchase to fund this mortgage to Capital Health match our long-term investment needs as a retirement system," John Cerra, a fixed-income portfolio manager at TIAA-CREF, said in a press release.
David Durning, a senior managing director at the unit of Prudential Financial Inc., said in the release that it expects to originate more than $1 billion of FHA-insured loans this year.
Prudential Huntoon Paige, the mortgage unit's FHA lending business, says it is that agency's second-biggest multifamily and health-care originator and the third-largest issuer of multifamily securities for Ginnie Mae. Prudential Huntoon Paige services more than $5 billion of loans, including $2.7 billion of hospital loans.