Articles

Annual Build-to-Rent Starts Hit Another High in Q3 2024

As more single-family rental (SFR) operators rely on build-to-rent (BTR) development to supply new inventory, construction starts have steadily risen, reaching another record high in the third quarter of 2024. SFR/BTR construction has eclipsed 92,000 units in the last four quarters — an all-time high and an annual increase of 31.4%.

Articles

LIHTC Program: An Impactful Affordable Housing Financing Resource

As renters face a national shortage of 7 million low-income rental homes, the U.S. Department of Housing and Urban Development’s (HUD) Low-Income Housing Tax Credit (LIHTC) program is pivotal in helping to close the affordability gap for renters. It is the nation’s most significant resource for affordable apartment housing construction, which gives state and local agencies approximately $10 billion in annual budget authority to issue tax credits for affordable housing development.

Articles

FHFA Loan Caps for 2025: What Multifamily Borrowers Need to Know

The Federal Housing Finance Agency (FHFA) announced a $3 billion boost to Fannie Mae and Freddie Mac’s volume cap for loan purchases in 2025 to $146 billion ($73 billion for each agency). This increase in FHFA loan caps for 2025 aligns with industry expectations, given the anticipation of improving market conditions and lending activity expected in a lower interest rate environment. Next year’s cap for the Government-Sponsored Entities (GSEs) is an increase of approximately 4% from the $140 billion limit set for 2024.

Analysis

U.S. Multifamily Market Snapshot — November 2024

The U.S. multifamily market held steady in a more normalized cycle through the first three quarters of 2024, following its skyrocketing recovery from the pandemic-related contraction. Rental demand remained strong, driven by the continued nationwide housing shortage and strong wage growth, while the high levels of new construction seen over the last two years appears to have peaked.

Current Reports

Small Multifamily Investment Trends Report Q4 2024

Small multifamily’s normalization pushed forward last quarter as the Federal Reserve made a long-awaited reduction to the target federal funds rate. Arbor’s Small Multifamily Investment Trends Report Q4 2024, developed in partnership with Chandan Economics, shows signs of stability have multiplied. Robust rental demand, a limited supply of quality affordable housing, and several other promising developments should support the subsector’s strength heading into 2025.

Analysis

Top U.S. Multifamily Rent Growth Markets — Q3 2024

The U.S. multifamily market held steady in a more normalized cycle during the third quarter of 2024. Rental demand remained strong, while new leaders emerged among the top markets for rent growth.

Articles

Top Markets for Wage Growth in 2024

One of the most essential factors multifamily investors need to consider before executing a transaction is the health of the local labor market. Wage growth and other trends are driven by a delicate, constantly adjusting balance of labor supply and demand. In some markets, an inflow of employers can cause wages to spike. In others, population outflows can create the same effect. In this deep dive, we expand on the data findings from the 2024 Top Markets for Multifamily Investment Report, exploring the unique conditions driving metro wage growth trends.

Press Contact

Press Contact If you are a member of the media and would like to arrange an interview with one of our knowledgeable multifamily and commercial real estate finance executives or if you have general media questions about Arbor, please contact us at [email protected] or through the below form.   Fill out the form to reach our press team.  

General: 800.ARBOR.10

FRDDIE MAC®

Moderate Rehab Loan

Arbor provides the capital you need to renovate your property at the lowest cost possible. During renovation, the loan can be an interest-only floating-rate debt, and loan proceeds are advanced monthly as requested rather than accruing interest on unused funds. The terms are highly negotiable, allowing for variation in borrower terms and structure needs. These loans offer a flexible liquidity source for experienced and well-capitalized sponsors who have successfully completed rehabilitation projects of similar scope and who are familiar with the loan process.

Loan Terms
  • Deal specific/negotiated
  • Interest-only during the Interim Phase
  • Hedge: Uncapped during the Interim Phase; cap required if converted to a floating rate Permanent Phase
Eligible Borrowers Experienced and well-capitalized sponsorswho have successfully completed rehabilitation projects of similar scope and who are familiar with the Freddie Mac loan process.
Eligible Properties Types
  • $25,000-$60,000 in renovations per unit with a minimum of $7,500 per unit designated for interior work
  • Minimum occupancy: Rehabilitation plan may not take debt service coverage ratio (DSCR) below 1.0x on an interest-only basis
  • Not eligible – seniors housing, student housing, MHC, preferred equity with hard pay, and mezzanine financing
Amount Loan-to-value (LTV) ratio:

  • Fund up to 80% of the as-is value, supported by the property acquisition price, if applicable
  • Periodic draws of unfunded loan proceeds (as opposed to an escrow) to reimburse the sponsor for up to 80% of the renovation costs on a monthly or quarterly basis as work is completed, similar to construction financing
  • Appraisal must demonstrate 80% as improved LTV (with fully funded renovation proceeds)

 
Debt service coverage ratio (DSCR):

  • Initial sizing – 1.20x interest only “as is”
  • An improved underwritten net operating income (NOI) per appraisal must reflect no less than 1.30x amortizing debt service coverage ratio (DSCR) and will be subject to appraisal support
Rehabilitation
  • Additional documents: Freddie Mac Disbursement Agreement, Disbursement Servicing Agreement, Operating Deficit Agreement & Completion Guaranty for 80% of approved budget and all work initiated, construction scope, budget and schedule
  • Pre-Construction Analysis Report: Must provide opinion to whether construction plan can reasonably be completed within the budget and schedule
  • Draws: Released upon request, but no more than once a month; first draw will be based on a certificate from the Servicer to Freddie Mac confirming that the request complies with the requirements set forth in the Disbursement Agreement (including but not limited to inspections, lien waivers and standard documentation); subsequent draws will require additional certifications as well as Freddie Mac’s independent confirmation of the information/documents supporting the prior certification. 5% retainage of draws are held and released once satisfactory confirmation of completion of all budgeted work has been received.
  • Monitoring: In addition to the draw certificates noted above, monitoring to reflect quarterly progress reports and inspections including rent rolls and operating statements.
  • Timing: All units must be habitable by 6 months prior to conversion to the Permanent Phase, and all renovation work is expected to be completed by 3 months prior to conversion to the Permanent Phase.
Structure
  • Loan type: Float-to-Float or Float-to-Fixed.
  • Conversion: FInterim Phase is floating, followed by either floating or fixed Permanent Phase; note rate to be determined at loan origination.
Prepayment
  • Float-to-Float: 2% prepayment premium during Interim Phase; standard Freddie Mac prepay structures available thereafter.
  • Float-to-Fixed: Yield Maintenance during Interim Phase; standard Freddie Mac prepay structures available thereafter.
Fees Standard fees apply, including application fee based on fully funded loan amount and good faith deposit.

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