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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®

Student Housing

Arbor’s Student Housing financing product provides attractive terms and competitive prices for the purchase or refinance of properties that, because of construction and location, specifically cater to a student tenant base and may or may not be readily convertible to conventional multifamily housing.

Eligible Borrowers
  • Borrower may be a limited partnership, corporation, limited liability company or a tenancy in common (TIC) with 10 or fewer tenants in common
  • General partnerships, limited liability partnerships, real estate investment trusts (REITs) and certain trusts may also be acceptable in limited circumstances, subject to additional requirements
  • Borrower must generally be a Single Purpose Entity (SPE); however, on loans less than $5 million, upon borrower’s request, a borrower other than a TIC may be a Single Asset Entity instead of a SPE
  • If the borrower is structured as a TIC, each tenant in common must be a SPE
Eligible Property Types
  • Purpose-built student housing properties; must have a minimum of one bathroom for every two bedrooms and each apartment must have a separate
  • Stabilized garden, mid-rise and high-rise apartment properties that are greater than 50% occupied by student tenants
  • Supporting college/university has 8,000 or more students; student housing properties located within close proximity to multiple schools that have a combined student body of 8,000 students or more will be considered
  • Property is located less than two miles from college/university or on a public transportation route
Loan Amount $5 million to $100 million (larger and smaller loans will be considered)
Loan Term 5 to 10 years (up to 30 years for fixed-rate loans if loan is not purchased for securitization)
Maximum Amortization 30 years
Financing Options Acquisition or refinance
Ground Lease Ground lease for land owned by a college or university may be permitted with prior approval
Lease Parameters
  • Individual tenant lease by the apartment, bedroom or by the bed
  • Rent under a master lease may be permitted with prior approval/li>
Lease Terms 12-month lease is preferred, although a shorter lease (of nine months or more) will be considered
Lease Guaranty Parental guaranty is preferred
Minimum DSCR 1.30x / 1.35x / 1.40x / 1.45x (Refer to: Student Housing Loan (freddiemac.com) for grid)
Maximum LTV 65% / 70% / 75% / 80% (Refer to: Student Housing Loan (freddiemac.com) for grid)
Tax & Insurance Escrows Generally required
Replacement Reserve Deposit Generally a minimum of $150 per bedroom or $300 per unit
Recourse Requirement Nonrecourse except for standard carve-out provisions
Supplemental Loans Available subject to requirements in the Loan Agreement and current Freddie Mac program and product requirements at the time of the supplemental loan request
Exclusions Residence halls or other multiple occupancy rooms with a shared common bathroom and centralized food service areas or dining halls
Early Rate-Lock Options (For Fixed-Rate Loans) Early rate-lock and Index Lock options available
Refinance Test No Refinance Test is necessary if the loan has an amortizing debt coverage ratio (DCR) of 1.40x or greater and a loan-to-value (LTV) ratio of 60% or less
Application Deposit Greater of $2,000 or 0.1% of loan amount

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