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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…

GENERAL: 800.ARBOR.10

FREDDIE MAC®

Lease-Up Loan

Arbor’s Freddie Mac Lease-Up Loan product allows newly constructed properties to lock in a rate and fund a loan before the collateral is fully stabilized.

Description Refinance Lease-Up – Refinancing for newly constructed properties
Acquisition Lease-Up – Acquisition financing for newly constructed properties
Loan Amount Typically $10M and up
Loan Terms 5-10 years
Loan Types Fixed- and floating-rate loans; Interest-only (I/O) available during lease-up period
Eligible Property Types
  • Well-constructed properties exhibiting strong lease-up trends in good locations and strong markets
  • Student housing and manufactured housing community transactions are not eligible
  • Stabilization expected within 12 months of closing
Eligible Borrowers Borrowers must have experience with new construction or lease-up properties and generally have strong financial capacity and real estate management expertise with good performance and credit history
Amortization 30 years
Minimum DCR
  • 1.30x (Conventional and Targeted Affordable)
  • 1.35x (Seniors Housing with Independent Living)
  • 1.45x (Seniors Housing with Assisted Living)
Maximum LTV (as-stabilized)
  • 75% for Refinance Lease-Up (Conventional and Targeted Affordable)
  • 70% for Refinance Lease-Up (Seniors Housing with Independent Living or Assisted Living
  • 70% for Acquisition Lease-Up (Conventional, Targeted Affordable Seniors Housing with Independent Living or Assisted Living)
Minimum Cash Equity Requirement
  • 15% for Refinance Lease-Up (Conventional and Targeted Affordable)
  • 20% for Refinance Lease-Up (Seniors Housing with Independent Living or Assisted Living)
  • 25% for Acquisition Lease-Up (Conventional, Targeted Affordable and Seniors Housing with Independent Living or Assisted Living)
Lease-Up Credit Enhancement Requirements
  • Lease-Up Credit Enhancement is required for all Lease-Up transactions
  • The form of the Lease-Up Credit Enhancement will be determined by Freddie Mac
  • The Lease-Up Credit Enhancement must be at least 5% of the unpaid principal balance (10% if the Lease-Up Credit Enhancement is a guaranty, subject to additional conditions)
  • Release of Lease-Up Credit Enhancement will occur once the property has achieved the required amortizing DCR based on average performance of the past 3 months, net rental income for the past 1 month meets or exceeds the level necessary to reach the required amortization DCR, and met other standard conditions as set forth by Freddie Mac
  • If the required DCR is not reached within 12 months, the Lease-Up Credit Enhancement will be used to resize the loan and recast the payments
Appraisal Report Must provide the “as-is” and “as-stabilized” value for the property
Closing Debt Service Escrow An additional 3-month debt service escrow may be required based on the property’s actual operations at underwriting
Rate Lock
  • 50% occupied
  • 60% leased
  • 60% or more Certificates of Occupancy issued
Premier Sponsors & Markets Except for Seniors Housing, additional flexibility is available on a case-by-case basis through an assessment of the sponsor and market as determined by Freddie Mac
Closing
  • 1.05x DCR (Refinance Lease-Up) and 1.0x DCR (Acquisition Lease-Up)
  • 65% occupied
  • 75% leased
  • 100% of Certificates of Occupancy issued (Conventional and Targeted Affordable)
  • 90% of Certificates of Occupancy issued (Seniors Housing with Independent Living or Assisted Living)
  • Assisted Living properties must have all required licenses authorizing operations

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