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Research

How Big is Small Cap Multifamily?

A closer look at the multifamily housing inventory in the United States and the size of the small cap investment opportunity.

Around the Web

Multifamily Forecast: Investors Moving to Secondary Markets

The apartment sector has remained the darling of the commercial real estate for the past six years. This doesn’t appear to be changing anytime soon, as 2016 is expected to set a new record for multifamily mortgage origination volume. While multifamily’s position as top dog remains uncontested, savvy investors are altering their strategy for sourcing Read the full article…

GENERAL: 800.ARBOR.10

Fannie Mae DUS®

Adjustable Rate Mortgage (ARM) 7-6

Arbor’s DUS ARM 7-6 product offers low-cost financing with an initial interest rate lower than available fixed rates, a maximum interest rate that is set upon loan origination, and the ability to convert to fixed-rate financing.

Loan Amount $750,000 minimum.
Loan Term 7 years.
Amortization Up to 30 years. Interest-only option is available subject to meeting eligibility criteria.
Minimum DSCR 1.00 at Maximum Interest Rate.
Maximum LTV Up to 80% LTV.
Interest Rate Limits Maximum ARM rate set at rate lock with the cost of the interest rate CAP included. The interest rate will reset every 30 days based on the applicable one-month LIBOR yield. 1% maximum increase or decrease to rate at each ARM change. Maximum lifetime interest rate to Borrower capped at 6%, plus the guaranty fee, plus the servicing fee.
Rate Structure Pricing is based on a margin plus the current one-month LIBOR.
Eligible Properties Mortgage loan for the acquisition or refinance of multifamily properties.
Eligible Borrower Single Asset Entity.
Occupancy Requirement 85% physical occupancy, 70% economic occupancy; 90% if loan amount is under $3,000,000.
Tax & Insurance Escrows Monthly deposits required.
Replacement Reserves Underwritten at a minimum $250 per unit per annum.
Recourse Typically non-recourse with standard carve-outs for “bad acts” such as fraud and bankruptcy. Loans less than $3M may be recourse (depending on MSA).
ARM Look Back 15-day look back for ARM adjustment.
Commercial Space Maximum 35% of net rentable area and maximum 20% of effective gross income.
Required Reports Appraisal, Property Condition Assessment, Phase I Environmental.
Prepayment Lockout for one year followed by a 1% prepayment premium during the ARM period. No prepayment premium during the last three months of ARM term.
Assumable Subject to approval and 1% fee (non-recourse loans only).
Supplemental Loans Not permitted prior to conversion to fixed rate. The ARM execution is eligible to be used for approved Supplemental Loans.
Pricing Tiered Pricing Matrix. More favorable terms available for higher DSC and lower LTV.
Accrual Actual/360.
Rate Lock 30-day commitments are available for an additional cost.
Application Deposit $20,500. Covers estimated processing and legal fees.
Origination Fee Minimum 1%.
Good Faith Deposit 2% of loan amount.
Conversion to Fixed Rate Any time beginning on the first day of second loan year and ending on the first day of the sixth loan year. The borrower may convert to either a 10/9.5 or a 7/6.5 fixed yield maintenance loan. No prepayment charged upon conversion. Conversion requires minimal re-underwriting. Loan amount cannot be increased, but borrower may request a Supplemental Loan. No change to guaranty and servicing fees upon conversion.

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