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621 SW Alder, Suite 605 Portland, OR 97205 503/295-7832 <br />MEMORANDUM <br />DATE: June 4, 2019 <br />TO: Amanda D’Souza <br />Business Development Analyst <br />CITY OF EUGENE <br />FROM: Jerry Johnson <br />JOHNSON ECONOMICS, LLC <br />SUBJECT: Questions Regarding our Review of MUPTE Application, RNS Management, LLC <br />The MUPTE Review Panel has forwarded a series of questions regarding our review of the RNS Management <br />application. The following is our response to those questions. <br />1.Would you classify the proposed building as Luxury Metro, Class AA, Class A, Class B, or Class C? <br />The classification of projects varies widely between markets, and generally reflect the relative position of the <br />project vis-à-vis the competitive environment. I would view this project and location as a Class A or AA. Wh ile <br />assumed rent levels are at the top of the market, I am not sure that the location is among the best in the market. <br />2.Are commercial multifamily loan fixed interest rates from banks, life insurance companies and credit unions <br />currently in the range of 3.8% to 4.3%, for 5-year term, 30-year amortization loans greater than $5 million? <br />Permanent loan terms for rental apartment buildings are still quite favorable. For this project the construction <br />loan may carry a somewhat higher interest rate due to perceived risk in achieving the assumed pricing. A 30-year <br />fixed rate is only modestly higher than a five-year rate and is likely a better permanent loan decision in this <br />market. The following tables summarizes some recent rate quotes: <br />Fannie Mae Small Balance Apartment Loan - Rates Updated 06-04-2019 <br />Loan Product Rate Amortization <br />5 Year Fixed 4.20%-4.79% Up to 30 years <br />7 Year Fixed 4.13%-4.70% Up to 30 years <br />10 Year Fixed 4.29%-4.83% Up to 30 years <br />15 Year Fixed 4.35%-4.88% 30 years <br />30 Year Fixed 4.85%-5.38% 30 years <br />55-80% LTV <br />Loan amounts from $1,000,000-$3 million - up to $5 million in major markets <br />Loan to value ratios up to 80% on purchases and 75% on refinances <br />Cash out refinances are acceptable <br />Pricing based on loan-to-value and debt service coverage ratio: <br />•Tier 2 - 75-80%/1.25x <br />•Tier 3 - 65%/1.35x <br />•Tier 4 – 55%/1.55x <br /> Interest only loans are available <br /> Step down and yield maintenance prepayment penalties <br /> Nonrecourse loans are available <br />Fannie Mae Large Balance Apartment Loan - Rates Updated 06-04-2019 <br />Exhibit B to Attachment F <br />September 11, 2019, Work Session – Item 1