Fannie Mae Seniors Housing Loans
Starting at $5 million, Fannie Mae Seniors Housing loans permit LTVs up to 80% and like most other Fannie Mae apartment loans are non-recourse with standard "bad boy" carve-outs.
Loans for Independent Living, Assisted Living, and Alzheimer's/Dementia Care Centers insured by Fannie Mae
Any wise investor can agree that seniors housing properties are a sound addition to any portfolio, with over 10,000 Americans hitting retirement age each and every day. For those interested in acquiring a senior housing development, the Fannie Mae Seniors Housing Loan can be a highly cost-effective way to do so. Fannie Mae Seniors Housing Loans have terms and amortizations up to 30 years, fixed and adjustable-rate interest options, and can be used for the acquisition or refinance of independent living, assisted living, and Alzheimer's/Dementia care facilities. These loans start at a minimum of $5 million, have a maximum LTV allowance of 80%, and are fully assumable (with a 1% fee and lender/Fannie Mae approval.)
Sample Fannie Mae Terms For Seniors Housing Loans
Size: $5 million minimum (exceptions can be made on an individual basis)
Terms: 5-30 years
Use: Acquisitions or refinances
Amortization: Up to 30 years
Interest Rates: Fixed and adjustable-rate loans available
Maximum LTV:
- 75% (80% for fixed-rate, tax-exempt bonds)
- 70% for Alzheimer's/Dementia care properties
- 70% for properties with a Skilled Nursing component
- Decrease max. LTV by 5% for cash-out refinances
- 1.30x for independent living only
- 1.40x for properties with 50% or more Alzheimer's/Dementia care
- 1.45x for 100% Alzheimer's/Dementia care properties
- 1.50x for properties with a Skilled Nursing component
- Weighted average calculation for properties with less than 50% Alzheimer's/Dementia care units
- Properties must have at between 5 and 50 units
- Properties must be stabilized, and can include manufactured housing communities
- For acquisitions or refinances, loans must be first lien
- Eligible borrowers must be single asset entities
- No properties with entrance fees are allowed
- Owner/operators must have at least 5 years successful experience in senior living communities, and must have owned/managed 5 or more senior housing properties
- Competitive interest rates
- Most loans are non-recourse
- Flexible prepayment options
- Supplemental financing is allowed
- 30- 90 day rate locks available (early and extended rate locks are also available-- early rate locks allow borrowers to lock the rate between 45 and 365 days before closing)
- Requires third-party reports including an Appraisal, Property Condition Assessment, Zoning, Termite, Flood and Seismic reports (for properties in specific areas), a Phase I Environmental Assessment, and a Seniors Housing Liability Assessment Report
- Replacement reserves are required ($300/unit per year)
- Typically requires 90% economic occupancy for 12 months (for independent living facilities) or 15 months (for Alzheimer's/Dementia care or Skilled Nursing properties), though this may vary
- Typically requires $15,000 application deposit and $3,000 non-refundable processing fee
- Typically requires a 1% origination fee
- A 2% rate lock fee is required (refundable at closing)
- Commitment fees may also be charged
Minimum DSCR:
Recourse: Most loans are non-recourse with standard carve-outs
Prepayment Options: Yield maintenance, defeasance, or graduated prepayment premiums
Commercial Space Limits: Commercial space must comprise no more than 10% of the net rentable area and produce no more than 10% of the project's effective gross income
Eligible Properties:
Advantages:
Disadvantages: