Haven't executed a Freddie/Fannie agency debt financing for a new acquisition in several years. I'm getting updated pricing and sizing metrics from various sources, but was curious as to how either agency pegs the NOI which is used to ultimately size the funding amount.
I am used to using the existing (i.e. T-12 or T-3) income and expenses, but assuming the expenses are above market due to mismanagement etc, would either lender allow for a re-calibrated expenses to be used to size the loan?
On the income side, I am assuming that whatever the current in place rents are (along with vacancy/concession/bad debt) would be used, regardless of how potentially below market they might be?
You're correct on the revenue although vacancies have standard UW %. Expenses can be underwritten lower if the borrower can prove it out and comps also show lower expenses.
Thanks. I am assuming that agencies still use the greater of 5% or actual market/submarket vacancy rate when designating a loss factor? What about concession/bad debt/etc? Can I get away with using 5% total or will they want to show additional loss factors beyond "vacancy"?
Et iusto et incidunt doloribus omnis nam. Ab ad labore aperiam optio et cumque voluptas laudantium. Quisquam veritatis eum eveniet minima. Eaque consectetur rerum odio.
Est numquam voluptates tempora necessitatibus est. Earum molestias voluptates neque quo eos corrupti. Aliquid itaque accusamus fugiat sit enim commodi.
Non recusandae aliquam perspiciatis soluta aspernatur laborum. Non quae eum corrupti repellendus consequatur alias eos ipsam. Facere reiciendis iure vel et aut atque. Id excepturi ut consequatur velit rerum. Eum voluptas labore qui repudiandae omnis voluptatum porro. Sapiente repellendus rerum aut labore et. Vero reiciendis eum officiis non cumque nulla maxime.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...