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Investment

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Current Reports

Single-Family Rental Investment Trends Report Q3 2024

The single-family rental (SFR) sector’s performance surged again last quarter, demonstrating its ability to thrive in all economic cycles. SFR construction continued its record-breaking ascent as CMBS activity blossomed. Arbor’s Single-Family Rental Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, examines the sector’s fundamentals as would-be homeowners weigh the rent-vs-buy calculation.

General: 800.ARBOR.10

Home | Freddie Mac | Lease-Up
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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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ARBOR.COM | 800.ARBOR.10
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