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
- 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
- New or repeat Fannie Mae Borrowers
- Available for all asset classes
Credit Facility Size
Minimum initial advance of $100 million with unlimited expansion capacity.
Flexible Credit Facility and loan terms. Generally, Credit Facility term exceeds initial loan terms by 5 years.
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.
Interest-only and amortizing 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.
- No rebalancing required.
- No unused capacity fees.
All structuring options/features subject to the terms of the Master Credit Facility Agreement.
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 sponsorship.
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.
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.