Bison Financial Group recently arranged a $7.3mm refinance loan on a Tampa Bay area multifamily property utilizing Fannie Mae funding. David Repka, principal of Bison Financial Group, was asked to discuss the transaction and give his insight on the benefits and intricacies of utilizing a Fannie Mae loan. The interview was part of a series of interviews that David has provided for The Crittenden Report over the years. This interview will be in The Crittenden Report in April 2025.
Q: Please describe the property:
A: Age: Built in phases in the 1960s
Property class: Property is well-maintained Class C property in a AA location
Q: What were the major hurdles and how did you overcome them?
A: We originated a CMBS loan secured by the property ten years ago. The loan was set to mature at the beginning of February. We signed the loan application with the Fannie Mae lender on December 23rd. Due to people traveling for the Holidays, we did not have a kickoff call until the first week of January. A lot of work needed to be done in a very compressed timeline. Due to new Fannie Mae rules regarding loans originated through mortgage brokers, our borrower was required to communicate directly with the lender, responding to their questions and sharing all financial information firsthand. This differed from our usual process, where we manage all lender communications, and the borrower participates only in weekly conference calls.
Q: What made this an attractive property to the lender?
A: Fannie Mae utilizes a risk-based pricing model according to LTV and debt coverage. The $7.3 million loan was made at Tier IV which is a loan that does not exceed 55% LTV and has a debt coverage ratio of 1.55x or higher. This is the tier that offers borrowers the best possible pricing since it is the lowest-risk loan they offer. There is no pricing advantage for a lower LTV and higher DSCR.
Q: What made this deal unique?
A: Our borrower has owned this asset for 18 years. The $7.3 million Fannie Mae loan was sized to retire the existing UPB of the loan of $4.2 million and provide equity repatriation for another $3.1 million. We spoke to a variety of Agency and Portfolio lenders during the marketing process. The loan we closed was the only one that was at the lowest possible rate, was cash-out, was non-recourse, was able to close in less than 45 days, and was for a term of five years. Many lenders were willing to do one or two of the required items from our wish list, but only the lender we closed with was able to hit all five. This was our 8th closing with the loan originator for this type of financing and the process was very smooth due to our longstanding relationship.
Q: Is this a typical deal for the lender? If not, what made them want to get involved?
A: Yes, this is a typical loan for the lender. We closed seven loans with the loan originator when he was at another institution. This new loan was our 8th together.
Q: What type of loan is it? Construction, construction/perm, acquisition, refinance, construction takeout, mini perm, mezzanine?
A: It is a 5 year permanent loan. The non-recourse loan provided over $3 million of equity repatriation to the borrower.
Q: If a refi, what type of loan did this replace? What type of lender?
A: The loan we replaced was a fixed-rate, CMBS loan with a 10 year term that Bison originated almost 10 years ago for our client.
Q: How did $7.3M amount break down? Will any of the proceeds go toward enhancements to the property? Was the borrower able to cash out any funds?
A: The borrower was able to repatriate much of the equity he invested into the property over the last 18 years of ownership. Because this was a return of capital, it was not a taxable event to our borrower.
Q: What was the loan term/amortization:
A: Term of 5 years. The first three years are interest only with the last two years on a 30-year amortization schedule.
Q: What was the LTV/LTC:
A: The loan was underwritten to a 55% LTV. Because the property was owned by our borrower for the last 18 years, LTC was not a major factor. At the loan amount, the borrower still had about $1 million of equity still invested in the deal. We were able to offer the borrower up to 80% LTV with this lender, but he wanted to keep his leverage at no more than 55%.
Q: What was the debt service coverage ratio (DSC):
A: 1.55x
Q: What was the debt Yield:
A: The DY was 11.12% and was not a factor in the lender’s underwriting.
Q: How much equity does the borrower have in the deal?
A: After the $3.1 million of cash out the borrower still has about $1 million of skin in the game.
Author: Jared Repka 
About the Author:
Jared Repka is the Co-Founder of Bison Financial Group in St. Petersburg, FL.
Bison arranges debt and equity financing for commercial real estate investors and developers.
Bison has relationships with investors across the risk spectrum funding acquisitions, renovations, and new construction.
Click to learn more about:
Bison Financial Group