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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 in strong markets and locations.
Acquisition
Acquisition Lease-Up – Acquisition financing for newly constructed properties in strong markets and locations.
Loan Amount $5,000,000 to $100,000,000.
Loan Terms 5.5 to 10.5 year fixed and floating rate loans (six months longer than standard term).
Loan Types Fixed and floating rate loans. Loan term extended up to 12 months longer than standard term based on stabilization projection. Interest-only available during the lease-up period provided for in credit policy.
Eligible Properties Conventional newly constructed multifamily properties in lease-up; construction must be substantially complete prior to funding. Well-constructed properties, exhibiting strong lease-up trends, and located in good locations and markets. Stabilization expected within 12 months of funding.
Sponsorship Sponsors must have experience with new construction and/ 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 1.30
Maximum LTV (as stabilized) 75% for Refinance Lease-Up, 70% for Acquisition Lease-Up.
Minimum Cash Equity Requirement 15% for Refinance Lease-Up, 30% for Acquisition Lease-Up.
Minimum Credit Enhancement Requirements For Acquisition Lease-Up – None
For Refinance Lease-Up – Letter of credit or cash hold back sized to:
• 5% of the underwritten value for a loan with LTVs ≤ 70%
• 10% of the underwritten value for a loan with LTVs > 70%
Required Reports Appraisal, Property Condition Assessment, Phase I Environmental, Zoning, Insect and Flood.
Appraisal Report The appraisal report must provide the “as is” and “as stabilized” value for the property. The underwritten value will be based on the “as stabilized” value (unless there is an adjustment for something other than construction or income until stabilization).
Prepayment For fixed-rate loans – yield maintenance until securitized, followed by two-year lockout; defeasance thereafter. No penalty for final 90 days.
For floating-rate loans – four main pre-payment options available with no penalty for final 90 days.
Pricing Tiered Pricing Matrix. More favorable terms available for higher DSC and lower LTV.
Performance Requirements ≥ 50% of units occupied to rate lock, ≥ 65% of units occupied to fund. All units issued Certificates of Occupancy to fund.
Funding DSCR For Refinance Lease-Up – 1.05 interest-only or amortizing DSCR
For Acquisition Lease-Up – 1.00 interest-only or amortizing DSCR
Release of Credit Enhancement/Requirements Stabilization Stabilization and/or release of credit enhancement will occur once the property has achieved 1.25 amortizing DSCR for three consecutive months and met other standard conditions as set forth by Freddie Mac. If stabilization not reached within 12 months, then the credit enhancement, if available, will be used to resize the loan and recast the payments.
Premier Sponsors & Markets Additional flexibility available on a case-by-case basis through an assessment of the sponsor and market as determined by Freddie Mac.
Application Deposit $12,500. Covers all estimated underwriting costs (including application fee). Additional non-refundable application fee due to Freddie Mac at Rate Lock: 0.1% of loan amount.
Legal/Closing Fee Arbor’s Counsel Fee to be determined at application.
Good Faith Deposit 2% of loan amount due at rate lock for early rate-lock transactions, but refundable post-closing or post-purchase of the loan by Freddie Mac.

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