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Credit Facility

Learn about the Credit Facility execution that allows borrowers to arrange flexible financing terms for a portfolio of properties.

Life Cycle of a Credit Facility

Benefits

  • MBS execution that allows ultimate flexibility in portfolio management
  • Allows opportunistic sale or release of properties
  • Expansion feature allows easy addition of properties
  • Recognize portfolio improvements with first lien borrow-ups
  • Retain favorable interest rates with property substitutions
  • Ladder maturities with multiple tranches of debt
  • Pre-negotiated loan documents provide for certainty of execution and fast closings for facility expansions

Eligibility

  • New or repeat Fannie Mae Borrowers
  • Available for all asset classes

Credit Facility Size

Minimum initial advance of $100 million with unlimited expansion capacity.

Term

Flexible Credit Facility and loan terms.  Generally, Credit Facility term exceeds initial loan terms by 5 years.

Interest Rate

Fixed, variable, or a combination of fixed and variable tranches.  Variable-rate advances may be converted to fixed rate.

An Interest Rate Cap or other Interest Rate Hedge is generally required for variable-rate advances.

Amortization

Interest-only and amortizing available, based upon property and pool performance.

Maximum LTV

Up to 75%, depending upon asset class and product type.

Credit Facilities that only include Multifamily Affordable Housing Properties allow up to 80%.

Minimum DSCR

Generally starting at 1.25x depending upon asset Class and product type. Multifamily Affordable Housing Properties may start at 1.20x.

Structuring Options/Features

  • No rebalancing required.
  • No unused capacity fees.

All structuring options/features subject to the terms of the Master Credit Facility Agreement.

Prepayment Availability

Flexible prepayment options available, including partially pre-payable debt, yield maintenance and declining prepayment premium. 

Borrower Entity

A single purpose, bankruptcy-remote entity is required for each borrower and any general partner, managing member, or sole member that is an entity. Borrowers must have common sponsorship.

Rate Lock

30- to 180-day commitments.

Timing of Rate Lock and Closing

The timeframes for Rate Lock and closing are subject to the number of properties, property-specific issues, locations, complexity of ownership issues, complexity of closing or execution requirements, and the level of document negotiation. The minimum closing timeframe for a new Credit Facility is 60 days from signed term sheet/ loan application.

Recourse

Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.

Escrows

Replacement reserve, tax, and insurance escrows are determined based on the merits of the transaction.

Third-Party Reports

Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.

Assumption

Assumption of the entire facility is permitted upon satisfaction of the requirements of the Master Credit Facility Agreement.