Seniors Housing Programs

Description

Non-recourse assumable financing for the acquisition or refinance of stabilized independent living (IL) and assisted living (AL) properties; Properties that assist residents with Alzheimer’s (ALZ) and/or Dementia are eligible for financing under Fannie Mae’s Seniors Housing Program; IL communities must have achieved and sustained at least an average of 90% economic occupancy for the preceding 12 consecutive months; AL/ALZ communities must have maintained this occupancy for the preceding 15 consecutive months; newly constructed and stabilized Senior Housing facility, as well as campuses containing skilled nursing beds, are also eligible for Fannie Mae’s Senior Housing program on a case-by-case basis; Buildings must be fully sprinklered; at least 80% of the beds must be private pay; CCRCs are eligible on a case-by-case basis

Loan Amount

Minimum $5,000,000, with exceptions on a case-by-case basis; Supplemental Loans are available under the Fannie Mae Seniors Housing Program

Loan Terms

5, 7, 10, 15 or 18 year balloons; 20, 25 or 30 year fully amortizing

Amortization

30 years maximum

Loan to Value Maximum

Maximum 75% of appraised value; maximum of 80% for tax-exempt bond financed transactions

Coverage Minimum

1.30x for independent living; 1.40x for facilities with an assisted living and/or Alzheimers component greater than 50%; Coverage for properties with less than 50% AL or ALZ will be on a weighted average basis; Coverage for stand alone Alzheimers facilities is 1.45x and coverage for properties containing any skilled nursing component is 1.50x

Borrower

Domestic single asset borrowing entity is required; Ownership and management must demonstrate at least five years’ experience with properties of similar composition, and should have a minimum of five properties in their portfolio

Interest Rate

Risk-based pricing; Fixed rate transactions are benchmarked off of the associated Treasury Bill; Adjustable rate transactions are benchmarked off of 30 or 90 day LIBOR; Pricing for facilities with 50% or more assisted living and/or Alzheimer’s units is 30 basis points higher than that for buildings that are predominantly independent; Low leverage, large or pooled transactions may qualify for pricing waivers

Prepayment

Yield Maintenance, Defeasance, and Graduated Prepayment Premium

Third Party Reports

MAI appraisal, Physical Needs Assessment, and Environmental Phase I Assessment and Management and Operations Assessment are required for all deals; Seismic Reports may be required for properties in Seismic Zones 3 and 4; A Regulatory Compliance Report is required for licensed properties

Reserves

Tax and insurance escrows are required; Repair and Replacement escrow funding is required, based on the greater of the engineer’s Physical Needs Assessment or $300 per unit per year

Application Fees

Approximately $17,000 to cover third party reports

Origination Fee

1% of loan amount; origination fee can be charged “outside” of the interest rate as a separate fee, or it can be built into the rate

Legal Fees

Approximately $15,000, varying with characteristics of the transaction

Timing

For new Borrowers, 60-90 days from commencement of the pre-screen process to closing, dependent on 3rd party report timing and borrower’s submission of due diligence; This timing can be reduced by 30 days for repeat Borrowers

Rate Lock

Rate lock occurs after borrower’s acceptance of commitment 30 to 90 day commitments available; extended rate lock feature is also available, allowing the borrower to lock a rate 45 to 365 days in advance of closing.

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