APARTMENT LOANS

Apartment loans reside in a very competitive part of the commercial mortgage market. Apartment lenders want your apartment loan business and are willing to compete on apartment financing rates and terms to get it. S&P Mortgage creates a competitive environment by shopping apartment loan requests to a wide variety of apartment lenders. Currently, we work with over 100 different lenders throughout the nation.

Typical Apartment Loan Rates (for loans over $2,000,000) Loan to Value (%) 50 60 70 80 10 yr fixed 6.1 6.1 6.4 6.5 5 yr fixed 6.5 6.5 6.7 6.9 3 mo ARM 7.2 7.2 7.4 7.6 Types of Apartment Lenders We shop loan requests to all types of apartment lenders including: Fannie MAE, Freddie MAC, FHA/HUD Lenders Conduit Lenders Banks Life Insurance Companies

Types of Apartment Financing Permanent - We find fixed and variable rate loans with terms from 5 to 20 years for stabilized properties. We find the best rates by encouraging competition for your business among lenders. Bridge and Construction - We find short term financing when you are creating value in the property. Equity and Mezzanine - We find partners who provide equity when you have an opportunity to add significant value over a short period of time (projects over $4,000,000 only).

Typical Apartment Financing Terms

Note: These are not terms of any specific lender. They represent terms that we frequently see in the marketplace and are not to be relied on as a commitment to provide any specific terms for any specific deal.

Maximum loan to value:	Apartments are most frequently financed at 80% of value or cost (whichever is lower). For loans under $2M, there are a few lenders who will go to 85% or 90% or will allow secondary financing for a combined loan to value of 85% to 97%. For long term fixed rate loans a small "mezzanine" piece can be added to the loan to yield an 85% LTV.
Debt service coverage:	The cash flow from operations must be at least 1.20 times the mortgage payment.
Term:	5, 7, 10, 15, 20 year terms are most common.
Amortization:	25 or 30 years if building is in good repair
Typical Rates:	10 year fixed = 10 yr US Treasury bill rate + 1.0% to 1.5% 15 and 20 year fixed = 10 yr Treasury + 1.5% to 2.0%> 5 year fixed = 5 yr Treasury + 1.5% to 2.0% ARM = LIBOR + 1.5% to 2.0%
Occupancy requirements:	Most lenders require 80% occupancy for 90 days in order to qualify for a permanent loan.
Prepayment terms:	10, 15, 20 year fixed rate loans - typically have prepayment based on "yield maintenance" or "defeasance". This kind of prepay can make it prohibitive to refinance or sell the property (prepayment fees can easily exceed 10% to 15% of the loan). Some lenders offer a reduced prepay for an increase rate (e.g. for 0.5% increase in rate the prepay can be a decreasing amount each year (e.g. 10%, 9%, 8%.....3%, 2%, 1% for the first ten years). 5 yr fixed rate loans - typically have a decreasing prepayment each year (e.g. 5%, 4%, 3%, 2%, 1%). Adjustable rate loans - typically have a decreasing and smaller prepay (e.g. 3%, 2%, 1%).
Recourse:	Apartment loans may or may not require recourse (personally guarantee).
Closing costs:	Borrowers are responsible for all due diligence and closings costs (e.g. Appraisal, Phase 1 Environmental, site inspection, title, etc) Closing Costs are lender specific.  Please contact your Commercial Loan Specialist for more information.