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.

• 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%.

1.25x – 1.35x, depending upon market.

15%.

• A Lease-Up Credit Enhancement may be required for all Lease-Up transactions, as 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.

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

Additional flexibility available on a case-by-case basis through an assessment of the market as determined by Freddie Mac.

Intended to capture improved NOI within the 12-24-month period following origination of a Lease-up loan, additional loan proceeds via a supplemental mortgage (pari passu) are permitted. Key features:

• The supplemental mortgage will be priced at first-mortgage pricing.
• Minimum supplemental amount: $1 million.
• Must be coterminous and have the same interest-rate type as the initial mortgage.
• LTV/DCR parameters align with first mortgage baseline requirements.
• Third party reports from the initial mortgage will be utilized, and the most recent servicing inspection must be submitted.
  • Additional proceeds are not eligible based upon a revised appraisal.
• One supplemental mortgage per initial mortgage. Any subsequent request for additional proceeds must be in the form of a second-lien Supplemental loan.

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.

• 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%.

1.25x – 1.35x, depending upon market.

25%.

• A Lease-Up Credit Enhancement may be required for all Lease-Up transactions, as 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.

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

Additional flexibility available on a case-by-case basis through an assessment of the market as determined by Freddie Mac.

Intended to capture improved NOI within the 12-24-month period following origination of a Lease-up loan, additional loan proceeds via a supplemental mortgage (pari passu) are permitted. Key features:

• The supplemental mortgage will be priced at first-mortgage pricing.
• Minimum supplemental amount: $1 million.
• Must be coterminous and have the same interest-rate type as the initial mortgage.
• LTV/DCR parameters align with first mortgage baseline requirements.
• Third party reports from the initial mortgage will be utilized, and the most recent servicing inspection must be submitted.
  • Additional proceeds are not eligible based upon a revised appraisal.
• One supplemental mortgage per initial mortgage. Any subsequent request for additional proceeds must be in the form of a second-lien Supplemental loan.