FANNIE MAE CREDIT FACILITIES Fannie Mae Multifamily provides a credit facility execution that allows a borrower to arrange flexible financing terms for a portfolio of properties on a crosscollateralized and cross-defaulted basis, with property addition, property release, property substitution, and borrow-up capabilities for all asset classes. Why Berkadia? Berkadia currently services 25 active Fannie Mae credit facilities and bulk deliveries totaling $4.6 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 2021, Berkadia was Fannie Mae’s #3 DUS lender and ranked #1 in combined Freddie Mac, Fannie Mae and FHA origination volume
Features of Fannie Mae Credit Facilities: • 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
Recent Examples: • $204.6M Sponsor Initiated Affordabilty (SIA) facility with a 1.20x DSCR and 35-year amortization • $158M initial advance with 7, 10, 12 yr., and SARM tranches; funding after multiple borrow ups and conversions totaled $242M • $226M in funding, including multiple borrow-ups, for the same client across multiple conventional and MAH credit facilities closed over several years • $989M in funding for a large manufactured housing client across four credit facilities closed in 2017, 2018 and 2020
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
The borrower anticipates holding most of the
experience has partnered with a large pension fund
assets long term but would like the flexibility
to acquire small portfolios. The initial acquisition is
to opportunistically sell as needed. Ideally, the
a portfolio of five value-add, market-rate properties
borrower expects to obtain additional financing
valued at $250 million and they intend to grow the
when NCF improvements are realized.
partnership to $500 million over three years.
Solution 12/11.5 Fixed-Rate 10/9.5 Fixed-Rate 10-year Structured ARM 7/5 Fixed-Rate 5/3 Fixed-Rate
Property improvements generate additional NCF and value
Borrower finances initial acquisition with three tranches of debt
Borrower releases trapped equity by borrowing up against portfolio improvements
Borrower adds five properties
Borrower sells three properties and pays down the variable-rate debt tranche
Borrower releases a property and adds a new one up to 180 days later
The Fannie Mae Advantage
Because we matched the credit facility structure
• No maximum facility amount
and features to the borrower’s strategy, they
• No unused capacity
mitigated their exposure to interest rate risk and realized huge savings over the term of the facility.
• No rebalancing • No penalty fees for long-term debt
Credit Facility Size Term
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 five 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 variablerate 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.
• 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 in any general partner, managing member, or sole member that is an entity. Borrowers must have common sponsorship.
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. For collateral additions and substitutions, the closing time frame is 30 days from signed application.
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.
STRUCTURED TRANSACTION EXPERTS
SVP, Head of GSE Lending 301.202.3551 email@example.com
mily Schultz E Managing Director 301.202.3562 firstname.lastname@example.org
teven Long S SVP, Agency Structured Transactions 312.845.8563 email@example.com
avid Leopold D SVP, Head of Affordable Housing 301.202.3547 firstname.lastname@example.org
iz Diamond L Managing Director, Head of Affordable Originations 415.646.7704 email@example.com
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