Value-Add Loans

• Developers/operators with experience in multifamily property rehabilitation and in the local market with sufficient financial capacity.
• 1.5x the standard minimum net worth and liquidity requirements for guarantors.
• Conventional Small borrowers are not eligible.

• Properties with no more than 500 total units in good locations.
• Well-constructed properties requiring modest repairs.
• Seniors housing, student housing, manufactured housing and cooperative communities are not eligible.

• Three years with one 12-month extension based on the borrower’s request and one optional 12-month extension based on Freddie Mac’s discretion.
• Floating-rate loan with full-term interest-only; no cap required.
• Standard 12-month lock-out with option for longer or shorter lock out based on borrower’s preference; borrower may pay off the loan at any time after the expiration of the lock-out period but must remit an exit fee of 1%; the exit fee will be waived if the loan is refinanced with a qualified Freddie Mac Conventional loan.
• Acquisitions and refinances; not assumable.
• Loan documentation at origination will include the Value-Add Rider, which will detail the terms/requirements of the rehabilitation.
• Escrows will include real estate taxes, insurance and replacement reserves.
• 15% cash equity generally required.
• For longer-term ownership, cash-out is available provided a completion guaranty on budgeted improvements in an amount at least equal to the cash- out in place.

Standard 0.5% of loan amount nonrefundable up front fee subject to adjustment depending on loan terms.

• Loan will be based on an “As-is” and “As-stabilized” NOI pro forma under the following credit parameters:
  • “As-is” baseline maximum loan-to-purchase / loan-to-value (LTV) ratio of 85% and minimum amortizing debt coverage ratio (DCR) of 1.15x, subject to market adjustment.
  • “As-stabilized” baseline maximum LTV of 75% and minimum DCR of 1.30x, subject to market adjustment.
• Sizing based on a 7-year sizing note rate.
• Appraisal must include as-is and as-stabilized values.
• Refinance Test not required.

• Rehabilitation must commence within 90 days of loan origination and be completed within 33 months.
• Acceptable budget of $10,000 per unit to $25,000 per unit.
• Budget can be adjusted by as much as 20% without additional approval; 50% of the budget should be spent on unit interiors.
• Completion Guaranty or rehabilitation escrow required.
• Borrower/Servicer reporting required.

• Final engineer review of work completion and quality is required.
• Refinance with a qualified Freddie Mac Conventional Loan with no exit fee; otherwise 1% applies.
• Freddie Mac will re-underwrite the loan according to then-current credit policy parameters.
• One-year borrower extension option is available for a 0.5% extension fee, assuming no event ofdefault.
• Additional Freddie Mac extension option is available thereafter with 1% extension fee.

Standard fees apply, including application fee and good faith deposit.