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Download Term Sheet
FREDDIE MAC OPTIGO®
Bridge to Resyndication
A Bridge to Resyndication Loan provides efficient, short-term financing (a taxable acquisition bridge loan) to help borrowers acquire or refinance Low-Income Housing Tax Credit (LIHTC) eligible properties.
The funding is a much-needed bridge that positions properties for recapitalization using 4 percent LIHTCs and long-term Freddie Mac financing, such as our Tax-Exempt Loans.
BRIDGE LOAN FOR LIHTC-ELIGIBLE PROPERTIES
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ELIGIBLE BORROWERS
Developers/owners with financial capacity who have successfully completed multiple resyndications using 4% LIHTC and tax-exempt debt.
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ELIGIBLE PROPERTY TYPES
- LIHTC properties at or nearing the end of their compliance period with LIHTC rents.
- Construction must be sound but will often require moderate repair; the only construction completed during the term of this facility would be any required life-safety repairs and material deferred maintenance.
- Must include evidence that a public agency with authority to issue Volume Cap Mortgage Revenue Bonds has sufficient tax-exempt bond (or loan) availability to meet the allocation needs of the anticipated LIHTC resyndication and has a highly predictable process for that allocation.
- A rider to the loan agreement (see below) will include specific performance benchmarks necessary to achieve the resyndication along with interim dates by which they will be achieved; examples would include final plans and specifications for rehabilitation, bond inducement resolution and commitment from the LIHTC investor.
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PRODUCT DESCRIPTION
- 24-month loan with one 6-month extension, with approval (see “Extension” below).
- Interest-only, floating-rate loan.
- Standby Fee applicable when used in conjunction with a TEL forward.
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MINIMUM DEBT COVERAGE RATIO (DCR)
1.15x standard.
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MAXIMUM LOAN-TO-VALUE (LTV) RATIO
- 85%.
- Cash equity requirement: 15% if owned less than 3 years.
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MINIMUM OCCUPANCY
Determined at funding using the comparable fixed-rate to achieve a 1.0x DCR.
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RIDER TO LOAN AGREEMENT
- Will provide specific performance benchmarks and dates by which they must be achieved.
- Performance benchmarks will be based on specific requirements necessary to close the LIHTC resyndication; these will include:
– Bond inducement resolution.
– 4% tax credit allocation.
– Final plans, specifications and budget for rehabilitation.
– LIHTC investor commitment.
– Commitments for all other sources necessary to close the LIHTC resyndication.
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EXTENSION
Freddie Mac approval required and will be based on progress toward LIHTC resyndication 0.5% fee required.
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ASSET MANAGEMENT
Quarterly reporting; borrower will provide quarterly updates on progress toward LIHTC resyndication, such as bond inducement resolution, LIHTC investor commitment, completion of plans and specifications, and general contractor bids for construction.
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BREAKAGE FEE
2%.
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EXIT FEE
2%; waived if refinanced by a Freddie Mac securitizable loan.
In its prequalifying review, Lument will attempt to estimate both the loan amount and the fees and costs associated with the transaction. Actual loan amounts and actual fees and expenses may vary from the prequalifying estimates. A prequalifying estimate is not a commitment to make a loan.