Current Reports

Affordable Housing Trends Report Spring 2024

As housing costs spiral, rental affordability has become a more urgent issue, burdening a greater number of Americans. Arbor’s Affordable Housing Trends Report Spring 2024, developed in partnership with Chandan Economics, examines the major policies and programs shaping the marketplace at a time when overdue federal funding expansions have increased agency budgets.


What Is Driving Lifestyle Renter Demand?

Lifestyle renters — those who have the means to own but prefer to rent or are willing to pay more for apartments with amenities — have become a key driver of rental demand in single-family rental homes, build-to-rent communities, and other types of high-quality multifamily housing. With this small yet influential demographic growing, our research teams examine and explain the factors driving lifestyle renter demand.


Build-to-Rent Well-Positioned to Fill Housing Market Gap

With nearly one-fifth of multifamily properties now over 65 years old, it’s time to consider solutions for rejuvenating the rental housing stock in the U.S. While building rehabs are a tried-and-true solution, build-to-rent (BTR) is an alternative that is well-positioned to expand as Americans increasingly favor renting over homeownership.


U.S. Added 514,000 New Rental Households in 2023

In a year when inflation and elevated interest rates weakened affordability, the rental housing sector strengthened and expanded. An analysis of newly released U.S. Census Bureau Housing Vacancies and Homeownership data shows the number of rental households climbed in 2023.

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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
  • 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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