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INVESTMENT REAL ESTATE SERVICES
Design of Loan Products
Design of Loan Products
HUD 221 (d)(4)
Construction or Rehabilitation of Multifamily Properties
ELIBIBLE PROPERTIES
Market rate, low-to-moderate income and subsidized multifamily properties.
Commercial
Space Limitation
Limited to 25% of net rentable area and 15% of underwritten effective gross income (up to 30% of underwritten EGI permitted in urban renewal areas under Section 220_
Minimum Scope of Work
All construction of new buildings plus renovation of existing buildings that meet one of the following conditions: a. Renovation costs total more than $15,000 per unit times a local cost factor (typically 190%-270%); b. Renovation will replace more than 50% of two or more buuilding systems: electrical, plumbing, mechanical, building envelope, structural.
Davis Bacon Wages
Payment of prevailing wages, as determined by the Department of Labor, is required for all contractors and subcontractors.
Recourse
Non-recourse
For More information on the offerings, please contact info@spherecrest.com
Interest Rate
Single fixed rate for both the constructin interest only period and the permanent loan term, determined by market conditions at time of rate lock. Rate lock deposit is 0.5% and refunded at closing
Loan Parameters
Subsidized
Affordable
Market Rate
For loan amounts up to $75 Million
Max. LTV 90% or LTC 90%
Min. DSC 1.11x
Max. LTV 87%
Max. LTV 85%
Min. DSC 1.11x
Min. DSC 1.18x
1
At least 90% of the units covered by a project-based Section 8 contract.
Regulatory Agreement in place with minimum set-aside (e.g., 40% of units at 60% AMI, or 20% of units at 50% AMI? in effect for at least 15 years
2
Eligible cost includes hard costs and most soft costs plus the as-is value of project or land. Examples of ineligivle costs include refundable reserves, preliminary marketing costs, and offsite improvements.
3
Term and
Amortization
Interest-only , fixed, for up to 3 years during the construction period plus 2 months for cost certification followed by an additional 40 years fixed and fully amortizing
Prepayment and Assumption
Negotiable with best pricing for 10 years of call protection { can be a combination of lockout and/or penalty}; Lockout typically ends after final certificate of occupancy followed by a 10 year declinging prepayment schedule 10,9,8,7,6,5,4,3,2,1); loan is fully assumable.
Escrows Payments
Prior to construction, reserves for interest, taxes, insurance, working capital [4% of the loan], and initial operating deficit; balances will be released to the borrower after 6 consecutive months of break-even operations. Post construction, taxes, insurance and mortgage insurance premium will be escrowed monthly and a capital needs reserve mainteained with montly deposits in accordance with HUD guidelines on a property-specific bases (minimum $250/unit/year).
Mortgage Insurance Premium
0.65% annually (0.70% for urban renewal projects under Section 220, 0.25%-0.35% for affordable and subsidized properties, and 0.25% for Energy Star certified properties]; amount due during construction term is capitalized in the loan.
HUD Application Fee
0.15% of estimated loan amount due with submission of initial application, plus 0.15% due with final application {entire 0.30% due with final application for affordable and subsidized properties].
Third-Party Reports
Appraisal, Market Study, Environmental, and future Capital Needs Assessment, plus, plus a review of the final construction and architectural documents by a HUD-approved third party contractor.
Timing
Appraisal, Market Study, Enbironmetnal, and future Capital Needs Assessment, plust a review of the final construction and architectural documetns by a HUD-approved third party contractor.
Other Costs
Lender's legal, title, and other standard borrower closing costs.
Third Party Reports
Appraisal, Environmental, and future Capital Needs Assessment, plus a review of the final construction and architectural documents by a HUD-approved third party contractor.
Timing
Varies by transaction, but typically between 7-12 months from due diligence to closing
Contact
910 Harvest Dr.
Blue Bell, PA 19422
215.402.6777
30daySOFR
4.05% ▲
WSJP
5YR TR
7YR TR
10YR TR
7%
3.56% ▲
3.75% ▼
4% ▼
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