Near-Stabilization (Fannie) and similar Freddie executions allow agency permanent placement on properties at 75%-90% occupancy that have not yet hit standard DSCR but project to stabilize within 6-12 months. Sizing is conservative, lower LTV and higher debt-yield floor, with conversion to standard pricing on documented stabilization.
Eligibility flow and structural mechanics
Threshold: typically 75% to 90% physical occupancy at closing with a documented lease-up trajectory supporting full stabilization within 6 to 12 months. The exact threshold and timeline vary by program and execution.
Sizing: more conservative than fully stabilized executions. Maximum LTV typically 5% to 10% lower; minimum debt yield typically 50 to 100 bps higher; minimum DSCR typically 0.10x to 0.20x higher. The conservatism compensates for the lease-up risk.
Reserves: typically larger upfront reserves than fully stabilized executions, additional debt-service reserve funded at closing to bridge the lease-up period and protect the lender from short-term cash-flow shortfall.
Structural sponsor benefit: Near-Stabilization allows the sponsor to lock the long-term agency execution at the early end of the lease-up window, eliminating the rate exposure between completion and full stabilization. Trade-off: more conservative sizing and slightly wider pricing than waiting for full stabilization.
Sources
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current
- Optigo lending program disclosures · Freddie Mac Multifamily · current