Does freddie mac allow a limited condo review for attached projects

The high cost of land and development has made many developers look hard to find ways to fund their developments and generate cash flow. Twenty-eight of the lofts are reserved for households earning no more than 50% of the area median income the remainder are market-rate. The development, a mixed-use and mixed-income building in downtown Portland, includes a 47,000-square-foot Safeway grocery store on the ground floor, 140 mixed-income, loft-style rental apartments on the top six floors, and 12 townhouse units adjacent to Safeway. Green Park announced in November that it had secured a $29.9 million Fannie Mae forward-commitment for the credit enhancement of tax-exempt and taxable bonds to fund the construction and permanent financing of Museum Place South. He said Fannie is very interested in urban redevelopment such as the projects Green Park finances in cities like Baltimore or Portland, Ore. вЂњWeвЂ™ve done some deals up to almost 30%,вЂќ said Richard Warner, chief underwriter for Green Park. It has been able to get waivers to go over the 20% ceiling on some projects. Green Park Financial, a Fannie Mae Delegated Underwriting and Servicing lender, has done a number of projects with ground-floor retail below housing. The GSE also needs to know that the commercial space can be absorbed into the local market.ДЇannie Mae, too, can go above its ceiling for the commercial portions. Like Fannie, FreddieвЂ™s expertise вЂ“ and mandate вЂ“ is in residential housing, but it will do mixed-use as long as it is convinced that the commercial activity will enhance the residential community and is compatible with housing, Kiffe added. вЂњThere is a little flexibility about that.вЂќ

вЂњThe 25% is not an absolute hard and fast rule,вЂќ agreed Mitchell Kiffe, vice president of multifamily flow-sourcing at Freddie Mac. will do deals like that, but the predominant percentage has to be housing.вЂќ вЂњWe did a downtown deal thatвЂ™s got a grocery store serving the residential tenants above it. вЂњThey do make exceptions to that for public-purpose projects, but they wonвЂ™t go way above that,вЂќ said Todd Rodenberg, senior vice president and chief operating officer for KeyBank Real Estate Capital. Freddie Mac does not have a square footage restriction, but it limits the commercial income to no more than 25% of the propertyвЂ™s gross income.Дevelopers might be able to get slightly larger commercial presences. вЂњThereвЂ™s a lot of very lendable properties that have mixed-use Freddie will buy the mortgages.вЂќДЇannie Mae requires that no more than 20% of the effective gross income come from the commercial space and no more than 20% of the net rental space of the building be commercial space. ThereвЂ™s вЂњa good percentageвЂќ of mixed-use properties that the GSEs can finance, he said.

How the GSEs see mixed-useДЇannie and Freddie have similar guidelines for mixed-use projects, noted Trent Brooks, CEO of Freddie lender Sierra Capital Partners. TheyвЂ™re paying a premium to live in an urban form вЂ“ and now Fannie Mae and Freddie Mac need to change.вЂќД«ut both GSEs are active in the mixed-use market, and their lenders said developers who can show need for the housing and potential market support for the commercial elements can successfully do some mixed-use business with the companies. вЂ¦ Mixed-use is one of the best ways to provide affordable housing. вЂњThis restriction basically segments the housing market toward separate use, which is anti-urban. вЂњThey really skew the real estate market against mixed-use housing and affordable housing,вЂќ Norquist told Affordable Housing Finance in December. Norquist, speaking in October at AHF Live: The 2005 Tax Credit DevelopersвЂ™ Summit in Chicago, said that mixed-use was even being adopted in urban locations by big-box retailers, which had long resisted the form, but more involvement by Fannie and Freddie would be a big help. The two government-sponsored enterprises (GSEs) have been reluctant to back housing-and-retail mixtures, according to John Norquist, president of the Congress for the New Urbanism and former mayor of Milwaukee. Fannie Mae and Freddie Mac both finance mixed-use projects, but one important critic wants them to do even more. The growing trend toward urban infill development is helping increase the popularity of mixed-use projects, in which residential and commercial elements coexist in the same development.

Does freddie mac allow a limited condo review for attached projects