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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.

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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) 5-5

Arbor’s DUS ARM 5-5 product offers a 5-year variable rate financing option with an embedded cap and an option to extend for an additional 5-year term or convert to fixed rate.

BENEFITS Attractive low-cost financing; no minimum or maximum loan size; maximum interest rate is set at rate lock; optional extension to second 5-year term with minimal reunderwriting; convertible to a fixed-rate loan with minimal reunderwriting
ELIGIBILITY Existing, stabilized multifamily properties, including: Conventional, Multifamily Affordable Housing, Seniors Housing, Student Housing, and Manufactured Housing Communities; loans for acquisition or refinance
TERM Initial 5-year loan term; optional extension to a second 5-year term at maturity; rollover will retain the same guaranty and servicing fees as the original loan; rollover will not incur a prepayment premium
AMORTIZATION Up to 30 years
INTEREST RATE ADJUSTMENTS Adjusts based on changes to the underlying index and is equal to the index plus the margin
MAXIMUM LTV 65%
MINIMUM DSCR 1.00x at the maximum lifetime interest rate; mortgage loan amount shall not exceed that of a fixed rate loan with similar terms
RATE LOCK 30-day commitments
INDEX 30-day average SOFR
SUPPLEMENTAL FINANCING Supplemental loans are available
LOCKOUT PERIOD; PREPAYMENT AVAILABILITY No prepayment is allowed during the first year of either the initial or second 5-year variable rate terms; thereafter, prepayment is permitted with the payment of a 1% prepayment premium; no prepayment premium is due during the “open period” (typically the last 3 months) of either the initial or second 5-year variable rate terms
INTEREST RATE CAP Maximum monthly interest rate adjustment of 1% up or down; maximum lifetime interest rate to Borrower capped at 5%, plus the guaranty fee, plus the servicing fee
INTEREST RATE FLOOR The interest rate will never be less than the sum of the investor spread, the guaranty fee and the servicing fee
CONVERSION TO FIXED RATE Subject to the terms of the loan document, the variable rate mortgage loan may be converted to a fixed rate mortgage loan (with a 7- or 10-year term) on any rate change date beginning on the first day after the Lockout Period and ending on the first day of the third month prior to the Maturity Date

  • No prepayment penalty is charged at the time that the variable rate Mortgage loan converts to a fixed rate mortgage loan
  • Minimal reunderwriting; lender determines that the current net cash flow can support the new fixed rate terms
  • No increase in the loan amount; loan may be eligible for a Supplemental Loan
ACCRUAL Actual/360
RECOURSE Nonrecourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy
ESCROWS Replacement reserve, tax and insurance escrows are typically required
THIRD-PARTY REPORTS Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment and Property Condition Assessment
ASSUMPTION Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience

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