Learn about the Credit Facility execution that allows borrowers to arrange flexible financing terms for a portfolio of properties.
Fannie Mae’s Credit Facility is a flexible financing tool that allows Borrowers to manage debt across their entire multifamily portfolio. Credit Facilities permit a combination of variable- and fixed-rate debt with laddered maturities and flexible post-closing features, so borrowers can manage complex and changing business strategies to achieve their long-term goals. Whether you are a new Fannie Mae Borrower or repeat customer, our structured finance team can help you create powerful solutions for your sophisticated financing needs.
- Must Be Cross-Collateralized and Cross-Defaulted
- Must Have Common Ownership and Control Across the Portfolio
- Add, Release, or Substitute Collateral
- Borrow-Up to Release Trapped Equity
- Unlimited Expansion Capabilities
- No Hidden Costs or Annual Re-Balancing
- All Structuring Options/Features Subject to the Terms of the Master Credit Facility Agreement
- Tranche Debt to Optimize Your Debt Strategy
- Ladder Maturities and Customize Prepayment
- Buy and Sell Assets on Your Own Schedule
- Grow Your Portfolio with Quick and Easy Expansions and Pre-Negotiated Loan Documents
- Retain Favorable Interest Rates and Reduce Prepayment Premiums with Property Substitutions
- Recognize Portfolio Improvements with First Lien Borrow-Ups
Life Cycle of a Credit Facility
- The collateral pool is identified for the initial closing of the Credit Facility
- The governing loan documents are tailored to the specific transaction and sponsor
- Debt tranches for the initial advance are determined based on borrower’s strategy
- Minimum $100 million funding for the initial closing
- Release trapped equity from the portfolio
- Recognize portfolio performance improvement with first lien borrow-ups
- Number of borrow-ups negotiated based on credit quality, sponsor, and term
- Continue to grow the Credit Facility by adding properties after the initial closing
- Unlimited expansion capacity with no maximum facility size determined upfront
- Pre-negotiated loan documents provide for easy closings on expansions
- Simultaneous or staggered release of a property followed by the addition of a new property
- Buy and sell assets on your own schedule without losing any flexibility
- Hold on to today’s rates and reduce or eliminate prepayment premiums if you sell
- Opportunistically release or sell assets on your own schedule
- Credit Facility debt is partially pre-payable
- Sponsor may choose which tranche of outstanding debt to pre-pay
Available for all asset classes to new or repeat Fannie Mae Borrowers.
Credit Facility Size
Minimum Initial Advance of $100 million with unlimited expansion capacity.
Credit Facility Term
The Facility terminates upon its full repayment or the Latest Facility Termination Date (typically 15 years from initial closing date or 5 years beyond the loan term of the Initial Advance).
Minimum 5-year loan term with fixed-rate advances up to 15 years and variable-rate advances up to 10 years.
Fixed, variable, or a combination of fixed and variable tranches. Variable-rate advances may be converted to fixed rate. An Interest Rate Cap is generally required for variable-rate advances.
Interest-only and amortizing options available, based upon property and pool performance.
Up to 75%, depending upon asset class and product type. Credit Facilities that only include Multifamily Affordable Housing Properties allow up to 80%.
Generally starting at 1.25x depending upon asset class and product type. Multifamily Affordable Housing Properties may start at 1.20x.
Flexible prepayment options available, including partially pre-payable debt, yield maintenance, and declining prepayment premium.
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 ownership and control across the pool.
30- to 180-day commitments.
Timing of Rate Lock and Closing
The time frames 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 time frame for a new Credit Facility is 60 days from signed term sheet/loan application.
Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.
Replacement reserve, tax, and insurance escrows are determined based on the merits of the transaction.
Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.
Assumption of the entire Facility is permitted upon satisfaction of the requirements of the Master Credit Facility Agreement.