Lease-Up Loan

Refinancing for newly constructed properties.

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.

• For Targeted Affordable Lease-Ups, borrowers must have experience in the development and/ or ownership of multifamily properties financed with credit-enhanced tax-exempt bonds, state and local affordable programs, Section 8, and/ or Low-Income Housing Tax Credits (LIHTC), and/ or work with an experienced LIHTC Syndicator, as applicable.
• For Seniors Housing Lease-Ups, borrowers must have experience owning and operating properties in similar service levels and size.

• 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.

• Fixed- and floating-rate loans.
• Interest-only (I/O) available during the lease-up period.
• See the Fixed-Rate Loan and Floating-Rate Loan term sheets for details.

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

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

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

• 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.

An additional 3-month debt service escrow may be required based on the property’s actual operations at underwriting.

• 50% occupied.
• 60% leased.
• 60% or more Certificates of Occupancy issued.

• 1.05x DCR.
• 100% of Certificates of Occupancy issued (Conventional and Targeted Affordable).
• Assisted Living properties must have all required licenses authorizing operations.

The appraisal report must provide the as-is and as-stabilized values for the property.

Except for Seniors Housing, additional flexibility available on a case-by-case basis through an assessment of the sponsor and market as determined by Freddie Mac.

Acquisition financing for newly constructed properties.

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.

• For Targeted Affordable Lease-Ups, borrowers must have experience in the development and/ or ownership of multifamily properties financed with credit-enhanced tax-exempt bonds, state and local affordable programs, Section 8, and/ or Low-Income Housing Tax Credits (LIHTC), and/ or work with an experienced LIHTC Syndicator, as applicable.
• For Seniors Housing Lease-Ups, borrowers must have experience owning and operating properties in similar service levels and size.

• 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.

• Fixed- and floating-rate loans.
• Interest-only (I/O) available during the lease-up period.
• See the Fixed-Rate Loan and Floating-Rate Loan term sheets for details.

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

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

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

• 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.

An additional 3-month debt service escrow may be required based on the property’s actual operations at underwriting.

• 50% occupied.
• 60% leased.
• 60% or more Certificates of Occupancy issued.

• 1.0x DCR.
• 100% of Certificates of Occupancy issued (Conventional and Targeted Affordable).
• Assisted Living properties must have all required licenses authorizing operations.

The appraisal report must provide the as-is and as-stabilized values for the property.

Except for Seniors Housing, additional flexibility available on a case-by-case basis through an assessment of the sponsor and market as determined by Freddie Mac.