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FHA Section 223f is the best way for you to buy or refinance an apartment building. These types of terms don’t exist in other loan programs. Multifamily building owners

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

usually can’t believe all of the benefits this program offers them.

What Is This Program?

FHA Section 223f is a Federal mortgage insured program. It doesn’t me

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

an that the government is funding the loan…they are insuring it against default. Section 223f is a section under the Federal National Housing Act. It allows the FHA (Fe

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

deral Housing Administration) to provide mortgage insurance to HUD approved lenders. This is to assist in the purchase or refinance of apartment or other types of multif

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

amily rental properties. The loan program allows for long-term mortgages (up to 35 years) that can be financed with Government National Mortgage Association (GNMA) Mortg

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

age Backed Securities.

Who Can Use FHA Section 223f to buy an apartment or multifamily property?

This program is available for both non-profit and for-profit bor

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

rowers. Under Section 223f, borrowers can receive an insured mortgage up to 85% of the appraised value or sales price (whichever is less). Or on a refinance, borrowers

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

can receive 80% with cash out (the 85% LTV applies to a standard refinance).

Eligible Property Types?

The property must have been completed or rehabbed at least

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

3 years prior to applying for this loan. Other than normal occupancy requirements, there are no income limits. The properties can be market rate or LIHTC (low income ho

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

using tax credits) properties. The properties can also be specifically used for handicapped or elderly tenants.

The property can either be walk-up, row, elevator, detac

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ed, semi-detached style. The property must have at least 5 or more units to be considered.

What Are The Benefits?

This is an awesome program. Some of the featu

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

res are:

Term/Amortization Schedule - It is a 35 Year Amortization/35 Year Term (with no balloon).
Interest Rate - A low, fixed interes

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

t rate, based on market spreads over the Ten-Year Treasury Yield.

Loan To Value (LTV) - It is 85% for purchase or refinance. On a refinance with cash ou

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

t, it is 80%.

Personal Liability - It is non-recourse for either the purchase or refinance.

Debt Coverage Service Ratio - A minimum 1.18

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

DSCR.

Loan Amounts - There are no maximum loan amounts and minimum loan amounts vary by lender.

Secondary Financing Allowed - 7.5% of t

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

he loan amount in the form of a promissory note is allowed..

What Are The Downsides To The FHA Section 223f Program?

Loan Processing Tim

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

e - With HUD approved MAP (Multifamily Accelerated Processing) lenders, the process can take 2 to 4 months. Non-MAP lenders can take 4 to 8 months.

Prop

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

erty - Property must be at least 3 years old at the time of application.

Prepayment Penalties - The prepayment terms are negotiable but they are usu

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ally a 5 year lock-out period then a declining prepay schedule after (5%, 4%, 3%, etc…).

If you are looking to buy an apartment building or refinance an exis

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ting apartment building, this is a program you should give high consideration to. You will be hard pressed to find such attractive terms anywhere else in the marketplace

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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