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Freddie Mac Bridge to Resyndication
Freddie Mac Bridge to Resyndication Loans help borrowers purchase or refinance properties with expiring LIHTC credits in order to help them acquire new LIHTCs. This financing is non-recourse, lasts 24 months, and permits LTVs up to 85%.
Freddie Mac Bridge Loans for the Purchase or Refinancing of LIHTC-Eligible Properties
If you're considering acquiring or refinancing a property with expiring Low-Income Housing Tax Credits, Freddie Mac's Bridge to Resyndication loan program could be a great fit for your needs.
Bridge to Resyndication loans provide effective short-term financing that helps properties position themselves for longer-term financing, which can facilitate the acquisition of new LIHTC credits. These loans offer generous financing terms, including an up to 85% allowance and a minimum DSCR of 1.15x. Plus, Freddie Mac Bridge to Resyndication loans are interest-only, support eligible mixed-use properties, and permit subordinate financing in certain circumstances.
To learn more, check out Freddie Mac’s official Bridge to Resyndication Product Sheet or keep reading below for an in-depth explanation of the Freddie Mac Bridge to Resyndication program.
Sample Freddie Mac Terms for Bridge to Resyndication Loans in 2023
Size: Varies based on LTV and DSCR requirements.
Use: Preservation of affordable housing. Provides short-term financing to help borrowers acquire or refinance Low-Income Housing Tax Credit (LIHTC) eligible properties.
Terms: 24-month loan with one 6-month extension (requires approval)
Interest Rate: Floating-rate, interest-only loan. Typically based on 1-month LIBOR.
Maximum LTV: 85%
Minimum DSCR: 1.15x
Eligible Borrowers: Developers with strong financial capacity who have successfully completed multiple resyndications using 4% LIHTCs and tax-exempt debt.
Eligible Properties:
LIHTC properties at or nearing the end of their compliance period with LIHTC rents
Good construction, may require some repairs (but repairs will not be completed during loan period unless they are of a life-saving/emergency nature)
Must demonstrate that a public agency has the ability to issue enough tax-exempt, Volume Cap Mortgage Revenue Bonds for the property, using a predictable process
A loan agreement rider will include specific benchmarks, including future rehabilitation plans for the property, benchmark dates, bond inducement resolution, and a commitment from an LIHTC investor
Up to 85% LTV allowance
Eligible mixed-use properties supported
Loans are interest only
Subordinate debt allowed under certain circumstances
Requires third-party reports including Phase I Environmental Assessment, Appraisal, and Physical Needs Assessment
2% potential breakage fee
2% exit fee (not charged if loan is refinance with another Freddie Mac loan product)
Also typically requires 2% rate lock fee (refunded when Freddie Mac purchases loan, typically 30 days after closing)
Subordinate Debt: Must be fully amortizing. Hard subordinate debt requiring the repayment of principal is only allowed if issued by a public sector entity. For soft subordinate debt, payment cannot be more than 75% of available cash flow.
Cash Equity Requirement: 15% if property has been owned less than 3 years
Occupancy Requirement: Minimum occupancy determined by using the comparable fixed-rate to achieve a 1.0x DSCR.
Advantages:
Disadvantages: