FREDDIE MAC OPTIGO®
Student Housing Loan
CUSTOM FINANCING FOR A SPECIFIC PURPOSE
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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 an SPE.
- If the borrower is structured as a TIC, each tenant in common must be a SPE.
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ELIGIBLE PROPERTY TYPES
- Purpose-built student housing properties, each apartment must have a seperate full kitchen and bathroom.
- Stabilized garden, mid-rise and high-rise apartment properties that are greater than 50% occupied by student tenants.
- Focused on colleges/ universities with increasing enrollment trends.
- Property is located less than 2 miles from college/university or on a public transportation route.
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TERMS
5, 7 and 10 years.
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AMOUNT
Minimum $5 million.
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MAXIMUM AMORTIZATION
30 years.
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FINANCING OPTIONS
Acquisition or refinance.
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GROUND LEASE
Ground lease for land owned by a college or university may be permitted with prior approval.
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LEASE PARAMETERS
• Individual tenant lease by the apartment, bedroom, or by the bed.
• Rent under a master lease may be permitted with prior approval. -
LEASE TERMS
12-month lease is preferred, although shorter leases may be permitted with prior approval.
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LEASE GUARANTY
Parental guaranty is preferred.
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RECOURSE REQUIREMENTS
Non-recourse except for standard carve-out provisions.
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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.
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EXCLUSIONS
Residence halls or other multiple occupancy rooms with a shared common bathroom and centralized food service areas or dining halls.
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TAX AND INSURANCE ESCROW
Generally required.
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REPLACEMENT RESERVE DEPOSIT
Generally a minimum of $150 per bedroom or $300 per unit.
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APPLICATION FEE
Greater of $2,000 or 0.1% of loan amount.
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EARLY RATE-LOCK OPTIONS (FOR FIXED-RATE LOANS)
Early rate-lock and Index Lock options available; Optigo lenders should consult with their regional Freddie Mac representative to determine eligibility.
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OTHER OPTIONS AND REQUIREMENTS
Please refer to the Fixed-Rate Loan or Floating-Rate Loan term sheets for additional information.
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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.
Loan-to-Value (LTV) Ratios and Amortizing1 Debt Coverage Ratios (DCR)2
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STUDENT HOUSING BASE CONVENTIONAL
MAXIMUM LTV AND MINIMUM DCR
ACQUISITIONS AND REFINANCESFIXED-RATE/FLOATING-RATE3 LTV/DCR
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≥ 5-YEAR AND
< 7-YEAR TERMAMORTIZING: 75% / 1.30x.
PARTIAL-TERM INTEREST-ONLY4: 75% / 1.30x.
FULL-TERM INTEREST-ONLY: 65% / 1.40x. -
> 7-YEAR TERM
AMORTIZING: 80% / 1.30x.
PARTIAL-TERM INTEREST-ONLY4: 80% / 1.30x.
FULL-TERM INTEREST-ONLY: 70% / 1.40x.
1The DCR calculated for the partial-term interest-only and full-term interest-only periods uses an amortizing payment.
2Adjustments may be made depending on the property, product and/or market. For properties with less than 2 years of leasing operations, subtract 5% from the LTV and add 0.05 to the DCR.
3Floating-rate proceeds are calculated based on the comparable fixed note rate.
4For partial-term interest-only loans, there must be a minimum amortization period of 5 years for loans with terms greater than 5 years. Acquisition loans with 5-year terms may have up to 1 year of partial-term interest-only. For terms of 10 years or more, loans may have interest only in an amount equal to no more than half of the loan term.
