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Research

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®

Small Balance Loan Program

Arbor’s Freddie Mac Small Balance Loan program streamlines the entire loan process for multifamily acquisition and refinancing loans ranging from $1 million to $7.5 million.

Loan Amount
Up to $7.5 million in all markets.

Note: Deals greater than $6 million and up to $7.5 million in Small and Very Small Markets may be permitted subject to Freddie’s approval of an exception request.

Unit Limitations
  • Loan amount ≤ $6 million: no unit limitations.
  • Loan amount > $6 million and &le $7.5 million: up to 100 units (exceptions permitted above 100 units)
Loan Term Fixed-rate loan terms of 5, 7 or 10 years. Hybrid ARM loan terms of 20 years with
initial 5, 7 or 10 years fixed.
Amortization Up to 30 years. Interest-only options also available.
Minimum DSCR 1.20 in Top Markets; 1.25 in Standard Markets; 1.30 in Small Markets;
1.40 in Very Small Markets;
Minimum 1.25x amortizing DCR for loans greater than $6 million.
Maximum LTV 80% in Top and Standard Markets;
75% if acquisition in Small/Very Small Markets;
70% refinance in Small/Very Small Markets.
Full-Term Interest Only DSC/LTV Thresholds
  • Minimum DSC 1.35 / Maximum LTV 65% in Top Markets
  • Minimum DSC 1.40 / Maximum LTV 65% in Standard Markets
  • Minimum DSC 1.40 / Maximum LTV 60% in Small Markets
  • Minimum DSC 1.50 / Maximum LTV 60% in Very Small Markets
Rate Structure Fixed and hybrid ARM loan terms available.
Eligible Properties Multifamily, minimum five residential units.
Eligible Borrower Up to $6 million – Individuals who are U.S. citizens; LPs; LLCs; SAEs; SPEs;
TICs with up to 5 unrelated members; and trusts (irrevocable trusts and revocable trusts with warm-body guarantor).
Between $6 million and $7.5 million – Single-Asset Entities
Occupancy Requirement Property must generally be stabilized at 90% physical occupancy for the trailing 3-month average prior to Underwriting or 85% for the trailing 3-month average prior to Underwriting under certain scenarios.
Tax & Insurance Escrows Real estate tax escrow deferred for deals with 65% LTV or less. Insurance
escrow deferred. Replacement reserve escrow deferred.
Replacement Reserves Underwritten at a minimum $200 per unit per annum.
Commercial Space Allowed up to 40% of total net rental income; no more than 40% of building’s
square footage.
Recourse Non-recourse with standard carve-out provisions required.
Prepayment Declining schedules and yield maintenance available for all loan types. All prepayment options are open for prepayment without penalty 3 months prior to maturity.
Assumable Subject to approval and 1% fee.
Pricing Tiered Pricing Matrix. More favorable terms available for higher DSC and lower LTV.
Rate Lock 60, 90, 120, 150, 180 day extended delivery options available.
Freddie Mac Fee A non-refundable application fee (0.1% of loan amount in all markets except Top
Markets) will be collected at time of rate lock.
Good Faith Deposit 1% of loan amount due upon acceptance and execution of the SBL Rate Lock Application; refundable post-closing.
Top Markets New York-Kings-Queens-Bronx-Richmond-Rockland-Westchester-Orange-Suffolk-Nassau-Bergen-Essex-Hudson-Somerset-Middlesex-Passaic-Union-Monmouth-Morris (NY-NJ-PA); Middlesex-Norfolk-Suffolk-Essex-Plymouth (MANH); District of Columbia-Montgomery-Prince George’s-Arlington-Alexandria-Fairfax-Fairfax City-Falls Church City (DC-VA-MD-WV); Dallas (TX); Cook-Lake-DuPage (IL-IN-WI); Los Angeles (CA); San Francisco-Sacramento-Contra Costa-Marin (CA); Alameda-Orange-Santa Clara-San Mateo (CA); San Diego (CA); Denver-Jefferson-Arapahoe-Adams (CO); Fairfield (CT); Miami-Broward-Palm Beach (FL); Dakota-Ramsey-Hennepin-Anoka (MN-WI); Washington-Clackamas-Clark-Multnomah-King-Pierce-Snohomish (OR-WA)

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