SENIORS DUS® HOUSING

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Case Study

Synopsis

Arbor Commercial Mortgage is one of 17 approved lenders to underwrite mortgages under Fannie Mae’s Seniors Housing Product, which provides flexible financing for eligible seniors housing properties. These include Independent Living, Assisted Living and/or Assisted Living with Alzheimer’s care facilities.

Experienced seniors housing owners and operators with a commitment to resident service and quality care are eligible for fixed or variable rate loans with amortization up to 25 years and a maximum loan-to-value of 75% (80% for tax exempt bond financed projects).

Fannie Mae defines seniors housing as a multifamily residence that is designed and managed specifically to meet the unique needs and desires of the elderly and frail elderly. Components of seniors housing that are critical to its long-term success are owner/operator expertise, location, functionality of the physical structure and the type, quality and delivery of services.

Frequently Asked Questions

What types of properties are eligible for financing under this program? Under this product, only the following types of seniors housing facilities are eligible for financing:

• Independent Living (50% or more of the total units dedicated to independent living)
• Assisted Living (50% or more of the units dedicated to assisted living and/or Alzheimer’s/dementia)
• A combination of the above eligible property types

Properties must be built specifically to meet the housing needs of seniors and must be fully equipped with sprinkler systems

inside the units and common areas.

What borrowers are eligible? Owners and operators should have a minimum of five years experience in the seniors housing industry and a minimum of five stabilized properties.

What is the maximum or minimum I can borrow? There is no minimum or maximum.

What are the loan terms? Terms range from 5 to 30 years.

What is the amortization? Up to 30 years

What is the maximum LTV? 75% (80% for tax-exempt bonds except for 5-year term)

What is the minimum DSCR?Term 10 years or greater 1.30x if the property is 100 percent IL. 1.40x if the property is 50 percent or more AL or AL/ALZ. If the property has some AL or AL/ALZH, but less than 75 percent, the minimum DSCR is a weighted average of 1.30x for the IL portion and 1.40x for the AL and AL/Alzheimer’s portion.
Term less than 10 years

1.35x if the property is 100 percent IL. 1.45x if the property is 50 percent or more AL or AL/ALZ. If the property has some AL or AL/ALZH, but less than 75 percent, the minimum DSCR is a weighted average of 1.35x for the IL portion and 1.45x for the AL and AL/Alzheimer’s portion.

What are the occupancy requirements? IL properties must be 90 percent occupied on average, for 12 months prior to funding. AL and AL/ALZH properties must be 90 percent occupied, on average, for 15 months prior to funding.

What is the rate lock timeframe? 30- to 90-day commitments are available. Extended Rate Lock feature is also available, allowing the borrower to lock a rate 45 to 365 days in advance of closing.

Case Study

Arbor recently funded a $6,000,000 loan under Fannie Mae’s Seniors Housing product to refinance the Edgewood Vista Senior Living complex in Minot, ND.

Edgewood Vista Senior Living

Minot, ND

The property is a 151-unit assisted living facility with 167 beds (includes 22 Alzheimer care beds).  Originally, Edgewood Vista consisted of two garden style buildings built in 1992.  The Alzheimer building was erected in 1998, and an additional six beds were included in 2004.

A number of beds have a Basic Care license, which allows for a higher level of resident care and state/federal oversight.  Additionally, this license offers the ability to provide Alzheimer services and allow Medicaid.

This loan enabled the borrower to use the property’s equity to purchase other real estate in the area.  It represents Arbor's first property financed through the Fannie Mae Seniors Housing Program.