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Purpose:
Mezzanine financing combined with a conventional
fixed-rate DUS loan between $3 and $25 million.
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Eligible
Properties: DUS-eligible multifamily properties
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Ineligible
Properties: Student and Senior Housing,
Manufactured Housing Communities, Multifamily Affordable
Housing, loans on co-operative properties, moderate
rehabilitation, bond credit enhancement or
multiple-asset transactions.
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Collateral:
Pledge of ownership interest in the borrowing entity
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Loan Amount:
Minimum of $187,500 and a maximum of 10% of the
underwritten value of the property.
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Loan Term:
Up to 10 years consisting of a 5-year term followed by
automatic extensions of 2 years, then three additional
1-year extensions subject to the property producing a
1.0x DSCR. Coterminous with the underlying DUS loan.
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Interest
Rate/Pricing: Fixed for the first 5 years then
converts to a variable rate based on a predetermined
spread over the 3-month LIBOR.
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Amortization: Up to 30 years. Interest only
options are available subject to certain restrictions.
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Origination
Fees: 1% paid to the mezzanine investor
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Max LTV:
Max combined LTV is 85%
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Min DSCR:
Minimum combined DSCR is 1.1x
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Recourse:
Recourse to the borrower and key principals if the
borrower declares bankruptcy
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Property
Occupancy: New properties must have stabilized
(typically 90% for 90 days) prior to funding.
Pre-stabilized properties considered on a case by case
basis
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Min
Vacancy/Collection Loss: 5%
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Escrows:
Replacement reserves, tax and insurance escrows are
required.
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Replacement
Reserves: Required
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Third Party
Reports: Appraisal, Phase I and a Physical Needs
Assessment are required.
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Interest
Accrual Basis: Actual/360 or 30/360
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Rate Lock:
Committed and rate locked up to 4 months in advance of
closing
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Assumption:
Subject to the consent of FNMA and the mezzanine
investor and upon payment of 1% to the mezzanine
investor
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Prepayment
Provisions: The mezzanine loan may not be prepaid
during the first year. After the 1-year lockout there is
a declining prepayment schedule beginning at 2% and
declining at .5% each year.
