Multifamily Debt Financing

• Loan points

  • fees as % of the total loan proceeds

  • 0,5% - 2 % depending on the loan amount

• Mortgage Brokers

  • Help sources loans & improve terms

  • additional fee

  • 0.5% - 2% depending on the loan amount

• Term sheet shows the main terms in detail what the lender and you agree to

• Loan Amount (Senior Debt)

  • 50% - 75%

• Interest Rate

  • Index + Spread

  • Spread based on risk

• Term

  • 3 - 10 years

• Amortization Period

  • 30 - 40 years

• Term

  • Length of time before entire principal balance must be paid back in full

• Amortization

  • Schedule over which periodic payments are calculated

• Often different

  • Balloon payment

    • Total principal Balance remaining at end of loan term

• Period in which only interest payments are made

  • reduce total loan cost

• immediate cash flow benefit

• Increases operational risk wehn NOI is expected to materially increase

  • Makes sense if rennnovation is still in place and after year 3,4 if everything is ready the principal payments can be done

• Increases long term refinance risk

• Calculation of the year interest payment (komulative Zinszahlungen)

  IF(F1<=$B$5;CUMIPMT($B$3/12;$B$4*12;$B$2;F1*12-11;F1*12;0);0)

• IF(F1<=$B$5; -> gibt das Startdatum und den Term wann Loan endet

• CUMIPMT($B$3/12; --> gibt Interest rate an p.a

• $B$4*12; -> gibt Amortization an

• $B$2; -> gibt Loan Höhe an

• F1*12-11; ->Gibt Startdatum an

• F1*12; -> Enddatum

• 0) -> Bestätigung Wahr

• ;0) - Bestätigung wahr

• Gibt Kumulative Tilgungshöhe an

IF(F1<=$B$5;CUMPRINC($B$3/12;$B$4*12;$B$2;F1*12-11;F1*12;0);0)

• IF(F1<=$B$5; -> Wann startet und welchen Term bis bulletpayment

• CUMPRINC($B$3/12; -> Gibt Zinszahlung wieder

• $B$4*12; -> gibt die Amortization an

• $B$2; -> Loan Höhe zu Beginn

• F1*12-11; -> Startdatum

• F1*12; -> Enddatum

• 0); - Bestätigen

• 0) - Bestätigen

• Future loan proceed agreed to upon loan closing to fund capital costs

  • renovation expenses

• In diesem Kontext bedeutet es, dass das Unternehmen bei der Aufnahme des Darlehens bereits berücksichtigt hat, dass die zukünftigen Einnahmen aus dem Darlehen (z.B. durch Investitionen, die mit dem Darlehen finanziert werden) ausreichen müssen, um die Zinszahlungen und andere Kapitalkosten zu decke

• Percentage of outstanding loan amount

• Step down: 5 - 1% , 4 …, 3…, 2…., 1 - 5%

• Yield maintenance

  • NPV of onterest lender would habe received if loan were held to maturity

• Defeasance

  • Cost to replace yield with government bonds

• Prepayment “window”

  • Prepay loan without penalty

• Lockout Period

  • Time during which the loan cannot be prepaid

The maximum loan amount based on

• Maximum:

  • Loan to value (LTV)

    • Loan amount as % of appraised value of the property

    • Loan to Cost (LTC)

      • Loan amount as % of the total project costs

• Minimum

  • debt service coverage ration (DSCR)

    • Annual net operating income (NOI) divided by annual debt service

  • Debt Yield:

    • Net opertating income (NOI) divided by loan amount

Berechnung der jährlichen Schulddeckungsquote durch NOI

Formel:

= PV (Zinsen /12 ; Amortization *12 ; (-) NOI / DSCR /12; 0 ; 0)

• Operating restrictions & requirements

  • Insurance requirements

  • subordinated debt

• Financial reporting

• Escrow requirements

  • property taxes & insurance

• Recourse

  • Borrower is personally liable

• Non ressource

  • Borrower is not personally liable

  • bad boy carve out —> example, commiting fraud