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Freddie Mac

Lease Up

 

ELIGIBLE BORROWERS

Borrowers 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.

LOAN TYPES
  • Fixed- and floating-rate loans.
  • Interest-only (I/O) available during the 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.

REFINANCE LEASE-UP

Product Description

Refinancing newly constructed properties.

Maximum LTV (As Stabilized)

  • 75% (Conventional and Targeted Affordable).
  • 70% (Seniors Housing with Independent Living and/or Assisted Living).

Minimum DCR

  • 1.30x (Conventional and Targeted Affordable).
  • 1.35x (Seniors Housing with Independent Living).  
  • 1.45x (Seniors Housing with Assisted Living).

Minimum Cash Equity Requirement

  • 15% (Conventional and Targeted Affordable).
  • 20% (Seniors Housing with Independent Living and/or Assisted Living).

Closing

  • 1.05x DCR.
  • 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 and/or Assisted Living).
  • Assisted Living properties must have all required licenses authorizing operations.

ACQUISITION LEASE-UP

Product Description

Acquiring newly constructed properties.

Maximum LTV (As Stabilized)

  • 70% (Conventional and Targeted Affordable).
  • 70% (Seniors Housing with Independent Living and/or Assisted Living).

Minimum DCR

  • 1.30x (Conventional and Targeted Affordable).
  • 1.35x (Seniors Housing with Independent Living.
  • 1.45x (Seniors Housing with Assisted Living).

Minimum Cash Equity Requirement

  • 25% (Conventional and Targeted Affordable).
  • 25% (Seniors Housing with Independent Living and/or Assisted Living).

Closing

  • 1.00x DCR.
  • 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 and/or Assisted Living). 
  • Assisted Living properties must have all required licenses authorizing operations.
    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.

    LEASE-UP CREDIT ENHANCEMENT
    • A 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 amortizing DCR and has 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.


    This sheet sets out the general guidelines of a loan program and is designed solely as an aid to prospective borrowers and other clients. It does not represent or imply a contract or a commitment to lend funds. A commitment to lend funds may only be made by a written letter issued by NewPoint to a prospective borrower. This term sheet is subject to change at any time without notice at the sole discretion of NewPoint Real Estate Capital LLC.