Fannie Mae Seniors Housing Loan
Fannie Mae provides financing for seniors housing properties. This program includes flexible financing, competitive pricing, and fast execution. Sponsors and Operators must have a minimum of five years of experience in the seniors housing industry and a minimum of five stabilized properties.
Up to 30 years
Fully funded replacement reserve, tax and insurance escrows are required.
Standard third-party reports including Appraisal, Phase I Environmental Assessment and a Physical Needs Assessment are required. In addition, a Consultant’s Report on Management and Operations is required for all types of seniors housing properties, and a Regulatory Compliance Report is required for licensed seniors housing properties.
Fixed and variable rates.
Mortgages are typically assumable.
30- to 90-day commitments. An early rate lock feature is available allowing the borrower to lock a rate 45 to 180 days in advance of closing.
Yield maintenance and other graduated prepayment options.
The Credit Enhancement Instrument issued by Fannie Mae is provided in accordance with the terms of a Reimbursement Agreement between the borrower and Fannie Mae, among other documents.
Obtaining HUD, Freddie and Fannie, USDA non-recourse financing for Seniors Housing Properties can take longer (6 months to a year) than conventional loans but the benefits often outweigh the delay factor. Please contact us if these loans interest you and we will guide you through the process.
In addition to strong personal credit, the lender will be interested in the following elements when examining a loan request for seniors housing.
- Positive Trend. Nothing scares lenders more than negative sales and earnings trends in a business or its industry. Conversely, a pronounced positive trend is a thing of beauty to a lender. They may look back several years to see how the business performed through past economic cycles.
- Business Plan. Buyers are required to submit a basic business plan for the senior care business they are acquiring. Lenders want to see an intimate understanding of the business and industry. In most cases, a plan calling for modest growth and incremental change is the safest bet.
- Continuity. Commitments by existing managers, key personnel, suppliers and customers to continue with the new owner represent a reduced risk to a lender.
- Seller Training. Lenders want to see a well-thought-out management transition plan. A training/transition period to the new owner could be anywhere from 1 to 12 months. Be sure to negotiate this point upfront and clearly spell it out in the purchase agreement.
- Seller Financing. When a seller agrees to finance even 10-15% of the deal, (subordinated to the banknote) it shows the lender that the seller is confident in the business under the new buyer’s leadership and it shows commitment from the seller to make the transition work. This condition is commonly imposed by lenders.
Whether you are looking to purchase or refinance an independent or assisted living facility or business, develop a new senior housing facility, or expand your current senior housing business, loans are readily available. Let us guide you through the process and help position you for a successful loan approval.
Reach out to Us.