Dougherty Mortgage approached Fannie Mae on behalf of the sponsor, Dominium, to finance the acquisition of a 192-unit property outside of Boise, ID. Ideally, they needed acquisition financing that could accommodate a period of lower vacancy while they made capital improvements. This 100% LITHC property was built in 2001-2002 and struggled with low physical occupancy, high bad debt and concessions, and poor property management. Dominium saw the asset as an opportunity and planned, upon acquisition, to begin $500,000 ($2,500/unit) worth of rehabilitation and provide professional management services.
Dominium chose Fannie Mae's Reduced Occupancy Affordable Rehab (ROAR) loan because it allowed them to obtain proceeds based on the property's projected "as stabilized" value and DSCR. Fannie Mae closed a $7.2 million preservation loan, of which $1.2 million was secured by a letter of credit to be released upon property stabilization.
Because ROAR provides a single loan with immediate proceeds, the sponsor doesn't need to finance the deal twice, either through construction and permanent loans or a smaller-balance first mortgage followed by a supplemental. Get the capital you need to renovate your Multifamily Affordable Housing property -- without a construction loan -- with Fannie Mae's ROAR.
Learn more about ROAR
Our Reduced Occupancy Affordable Rehab execution provides the capital you need to renovate your Multifamily Affordable Housing property. ROAR offers an increased scope of work, higher leverage, and all the benefits of Fannie Mae financing -- certainty of execution, speed, and the flexibility of our single-asset security.
Three additional ROAR features not used for this transaction are the ability to:
Fannie Mae's Multifamily Affordable Housing team customizes solutions to meet the needs of the borrowers who house America's working families. Contact a Fannie Mae representative today or visit fanniemae.com/multifamily to find out more.