Student Housing

Description

Non-recourse, fixed and adjustable rate financing for the acquisition or refinance of stabilized Student Housing (20% to 80% concentration) and Dedicated Student Housing properties (greater than 80% student concentration)

Loan Amount

Minimum $3 Million

Loan Terms

5, 7, 10 or 15 year balloons; 20, 25 or 30 year fully amortizing

Amortization

25 or 30 years; Interest Only may be available based on leverage and loan term

Loan to Value Maximum

Maximum 75% of appraised value, or, if property has been purchased within the past 12 months, 75% of lower of appraisal or purchase price (and up to 3% of closing costs) plus value added renovation

Coverage Minimum

1.30x fixed rate / 1.05x adjustable rate (based on loan coupon plus 3%)

Borrower

Domestic single asset borrowing entity is required

Interest Rate

Risk-based “Tier” pricing, varying with LTV and DSC ratios

Prepayment

Yield Maintenance with no lockout

Third Party Reports

MAI appraisal, Physical Needs Assessment, and Environmental Phase I Reports are required; Seismic Reports may be required for properties in Seismic Zones 2 and 4

Reserves

Tax and insurance escrows are required; Funded Repair and Replacement escrow is required, based on Physical Needs Assessment; For loans at less than 65% of value with no deferred maintenance, funding of repair and replacement reserve can be waived, at lender’s discretion

Application Fees

$15,000 to cover third party reports and processing/underwriting costs

Origination Fee

Fannie Mae requires minimum origination fee equal to 1% of loan amount for loans of $9 million or less; Minimum fee decrease with increasing loan size; Origination fee can be charged “outside” of the interest rate as a separate fee, or it can be built into the rate

Legal Fees

$8,000 to $12,000 varying with characteristics of the deal

Timing

45-60 days from application to commitment; dependent on 3rd party report timing and borrower’s submission of due diligence

Rate Lock

Typically, lock occurs after commitment is issued; Early Rate Lock option is available, allowing rate lock within 3-4 weeks of application

Assumability

Loan is assumable, subject to lender approval of proposed replacement borrower; Fees include one percent assumption fee, part of which is paid to Fannie Mae, and a $3,000 processing fee to cover lender’s underwriting costs

Ineligible Property Characteristics

A property that offers food service and/or property on college/ university owned land

Requirements

Dedicated Student Housing Specific Requirements*:
a) Pre-Review requirements with Fannie Mae;
b) Near a campus with at least 20,000 students;
c) Within 2 miles of campus or on public/university transportation line;
d) Parental lease guarantees or financially qualified students required; and
e) Lease terms must be a minimum of 12 months
* Not required for student concentration below 80%