Fannie Mae Multifamily provides a credit facility execution that allows a borrower to arrange flexible financing terms for a portfolio of properties on a cross-collateralized and cross-defaulted basis, with property addition, property release, property substitution, and borrow-up capabilities for all asset classes.
Why Berkadia?
Berkadia currently services 30 active Fannie Mae credit facilities and bulk deliveries totaling >$5 billion in unpaid principal balances
We have consistently been ranked among the top Fannie Mae structured debt providers
In addition to conventional, Berkadia has closed credit facilities comprised of seniors, affordable (MAH) and manufactured housing assets
In 2024, Berkadia was Fannie Mae’s #2 DUS lender and ranked #1 in combined Freddie Mac, Fannie Mae and FHA/HUD origination volume
Recent Examples:
y $250M Sponsor Initiated Affordabilty (SIA) facility with a 1.20x DSCR and 35-year amortization
y $228M initial advance with 7, 10, 12 yr., and SARM tranches; funding after multiple borrow ups and conversions totaled $228M
y $355M in funding, including multiple borrow-ups, for the same client across multiple conventional and MAH credit facilities closed over several years
y $1.2B in funding for a large manufactured housing client across four credit facilities closed in 2017, 2018 and 2020
Features of Fannie Mae Credit Facilities:
y MBS execution that allows ultimate flexibility in portfolio management
y Allows opportunistic sale or release of properties
y Expansion feature allows easy addition of properties
y Recognize portfolio improvements with first lien borrow-ups
y Retain favorable interest rates with property substitutions
y Ladder maturities with multiple tranches of debt
y Pre-negotiated loan documents provide for certainty of execution and fast closings for facility expansions
For more information:
Please reach out to your Berkadia mortgage banking professional or visit Berkadia.com.
The Credit Facility Option Creates Significant Flexibility: A Case Study
Opportunity
A large regional borrower with limited Fannie Mae experience has partnered with a large pension fund to acquire small portfolios. The initial acquisition is a portfolio of five value-add, market-rate properties valued at $250 million and they intend to grow the partnership to $500 million over three years.
Strategy
The borrower anticipates holding most of the assets long term but would like the flexibility to opportunistically sell as needed. Ideally, the borrower expects to obtain additional financing when NCF improvements are realized.
Result
Because we matched the credit facility structure and features to the borrower’s strategy, they mitigated their exposure to interest rate risk and realized huge savings over the term of the facility.
The Fannie Mae Advantage
y No maximum facility amount
y No unused capacity
y No rebalancing
y No penalty fees for long-term debt
Borrower
Borrower
Fannie Mae Credit Facilities
Credit Facility Size
Minimum initial advance of $250 million with a maximum size of $1 billion or 20 properties.
Term Flexible credit facility and loan terms. Generally, credit facility term exceeds initial loan terms by five 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.
Minimum Facility LTV/DSCR Up to 75%, depending upon asset class and product type. DSCR starts at 1.25x.
Credit facilities that only include multifamily affordable housing properties allow up to 80% and may start at 1.25x.
Monitored DSCR < 1.10x Actual DSCR and a Springing Debt Service Reserve Facility DSCR <1.00x Actual DSCR.
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
Borrower Entity
Timing of Rate Lock and Closing
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 in any general partner, managing member, or sole member that is an entity.
Borrowers must have common sponsorship.
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. For collateral additions and substitutions, the closing time frame is 30 days from signed application.
Origination Fees The lenders origination fee must be approved by Fannie Mae and is determined on a case-by-case basis prior to application based on the size and makeup of the collateral pool for the initial advance.
Fannie Mae charges a structuring fee of 10 basis points on each advance.
Other fees (e.g. due diligence, substitution, release, assumption, and review) will apply.
