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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…


FHA® 232:


Arbor provides FHA-insured, long-term, fixed-rate financing for new construction or substantial rehabilitation of assisted living, congregate care and nursing home facilities nationwide. Arbor uses the LEAN program to expedite underwriting and approval. Applications may be processed either as single-stage (firm application), or two-stage (preliminary application, followed by firm application).

Loan Term & Amortization Construction loan period (interest-only), followed by 40-year permanent (fully amortizing)
Maximum Loan to Value-
New Construction
& Substantial Rehab
Determined by the lowest of:

  1. 90% of HUD replacement cost
  2. Maximum LTV
    • SNF/ILU: 80% (for profit), 85% (nonprofit)
    • New construction ALF/MC: 75% (for profit), 80% (nonprofit)
    • Sub rehab ALF/MC: 80% (for profit), 85% (nonprofit)
  3. DSCR: 1.45x
Fixed Rate Yes – construction and permanent
Eligible Properties New construction or substantial rehabilitation of assisted living; memory care; and intermediate, skilled nursing facilities, or combination thereof

  • Maximum processing occupancy of 95%
  • Commercial space cannot exceed 10% of gross floor area or 15% of gross income
  • Independent living units cannot exceed 25% of total units in the project (up to 30% if waiver is granted)
Ineligible Properties Life-care-fee CCRC; LTAC (long-term acute care), adult day or currently in bankruptcy
Eligible Borrower Single asset entity (for profit or nonprofit)
Ineligible Borrower Owner, operator or any affiliates currently in bankruptcy, or filed/emerged from bankruptcy within prior five years
Experience Owners, operators/management agents must demonstrate a successful track record commensurate with developing or rehabbing properties of similar type, size and complexity; an owner-operator must have at least three years’ ownership and operating experience; SNF administrators must also have three years of experience
Tax & Insurance Escrows Monthly deposits required
Recourse Nonrecourse, subject to HUD Regulatory Agreement
Commercial Space Maximum 10% of gross floor area and maximum 15% of gross potential income; 20% vacancy rate applied (daycare space is not considered commercial)
Required Reports Market Study, Appraisal, Architect Review of Construction Costs and Drawings and Phase I Environmental
Prepayment Typically 10% year one, declining 1% per year; other prepayment options available subject to market conditions
Assumable Subject to Arbor and HUD approval and payment of assumption fee
Good Faith Deposit Negotiable based on project type
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs
Origination Fee Negotiable
HUD Application Fee 0.15% due to HUD at pre-application, 0.15% at firm application; if borrower chooses nonrefundable straight-to-firm HUD application, fee is the full 0.3%
HUD Inspection Fee $5 per $1,000 (0.5%) of the mortgage amount for new construction and $5 per $1,000 (0.5%) of improvement costs for substantial rehabilitation
Legal/Closing Fee Borrower pays Arbor’s counsel fee and miscellaneous closing costs
Rehabilitation Qualifications > 15% of the “as rehabbed” appraised value, or replacement of at least two major building systems
Davis Bacon Davis Bacon labor standards and wage requirements apply to construction and rehab work
Licensing Borrower must provide to HUD evidence/documentation from the appropriate local/state tax licensing authorities showing approval for the operation of the project (or applicable portions thereof) prior to occupancy of the project (or applicable portion thereof)
HUD Mortgage Insurance Premium (MIP) 0.77% market rate; 0.45% affordable; 1% MIP upfront at closing


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