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Reduced Occupancy Affordable Rehab (ROAR)

Permanent mortgage loan financing for Multifamily Affordable Housing properties that need renovations.

Competitive Advantage (PDF)      Term Sheet (PDF)


Benefits

  • Flexible permanent loan solution that allows the sponsor to rehabilitate more efficiently
  • Eliminates need for a construction loan or forward commitment
  • Increased leverage opportunities when underwritten to as-improved rents
  • Interest only during rehab period

Eligibility

  • Existing, stabilized Multifamily Affordable Housing properties undergoing renovations
  • Borrowers and Lenders with demonstrated experience
  • Available for both acquisition and refinance

Term

5 - 30 years.

Amortization

Up to 35 years.

Interest Rate

Fixed- and variable-rate options. Variable-rate only available for a Credit Enhancement Mortgage Loan for a bond transaction.

Maximum LTV

Up to 90% “as stabilized.”

Minimum DSCR

1.15x – 1.20x “as stabilized.”

Execution

Cash or Credit Enhancement Mortgage Loan for a bond transaction. Interest only available, structured to match the rehab period.

Loan Size

$5,000,000 minimum; no maximum.

Eligible Properties

Stabilized Multifamily Affordable Housing properties undergoing renovations up to $120,000 per unit.

Eligible Borrowers

Strong borrowers with demonstrated tenant-in place rehab track record.

Rate Lock

30- to 180-day commitments.

Prepayment Availability

Flexible prepayment options available, including yield maintenance and declining prepayment premium. 

Rehab Period

12 – 18 months.

Rehab Period Occupancy

During the rehabilitation period occupancy may drop from stabilized levels to a minimum of 50%.

Rehab Period – DSCR

During the rehabilitation period, DSCR may drop from stabilized levels to a minimum of:

• 1.0x (Interest-only basis)

• 0.75x (Amortizing basis)

Rehab Escrow

Rehab funds escrowed by Lender.

Re-stabilization

Fully stabilized no later than 18 months after loan origination. Fannie Mae UW Fee 3 bps. Recourse Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy. Construction Completion and Operating Deficit Guarantees required during the rehab and stabilization period.

Fannie Mae UW Fee

3 bps.

Recourse

Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy. Construction Completion and Operating Deficit Guarantees required during the rehab and stabilization period.