What Your Multifamily Lender Wants After Closing: The Quarterly and Annual Reporting Package

What does a multifamily lender ask for after closing?

After closing, a multifamily lender asks for regular reports that show the building's income, occupancy and loan coverage. The core is an operating statement and a rent roll. Your loan documents list the rest.

The lender wants to see 3 things on a schedule: what the building earned, how many units were rented, and whether the income covers the loan payments. An operating statement is the lender's name for the building's profit and loss. A rent roll lists every unit, its tenant and its rent on one date. Loan documents often ask for the 2 of them every quarter or every year, and add a few items at year end.

Nothing in the package is new work if the books are closed every month. The loan these reports belong to is recorded each month as in recording a multifamily loan payment.

Where are a multifamily loan's reporting requirements written?

In your loan documents, in the section on financial reporting. It names each report, how often it is due and how many days after the period ends.

There is no general rule. Each loan has its own list and its own dates, and the only place to read them is your own loan documents. Fill in this table once, from those documents, and the reporting year is set.

Your reporting calendar, blank

A report your loan documents do not name does not go on the list. A report they name that is not here does.

What goes in a quarterly multifamily lender package?

Often 3 things: an operating statement for the quarter and the year to date, a rent roll dated the last day of the quarter, and the coverage calculation. Check your loan documents for your own list.

The operating statement is the P&L from the monthly report package for an apartment building, with the 3 months of the quarter added together. If the books are closed each month, the quarter is 3 numbers summed, not a new report.

What goes in an annual multifamily lender package?

Often the full-year operating statement, a year-end balance sheet, a certified rent roll, coverage for the year, and the escrow and reserve balances. Your loan documents may add or drop items.

The 12-month version is the T12 statement for an apartment building: the same P&L, 12 columns wide, with a total column. Your loan documents may call it the annual operating statement.

What is a certified rent roll for an apartment building?

A certified rent roll is a rent roll the owner signs to state that it is true and complete on its date. The wording comes from the lender or the loan documents.

The roll itself is the same report the books produce every month. What makes it certified is the owner's signature under a short statement that the roll is true and complete on its date. Multifamily Bookkeeping prepares the roll; the owner reads it and signs it. If your loan documents call for statements audited or reviewed by a CPA, that work belongs to your CPA, and we hand the closed books over for it.

What the roll must contain is in what a rent roll is. A roll that is checked against the bank every month is ready to sign on any date.

Which loan covenants does a multifamily lender package show?

The ones with numbers: the minimum loan coverage, and the escrow and reserve deposits being up to date. The package shows each figure next to what the loan documents require.

A covenant is a promise written into the loan documents that holds for the life of the loan. 4 kinds are common:

• A minimum loan coverage: net operating income must be at least a set multiple of the loan payments.
• Reports sent on time: each report in the calendar reaches the lender by its due date.
• Escrow and reserve deposits kept up to date: the monthly amounts for tax, insurance and replacements are paid with the loan payment.
• Insurance kept in place: the policy the loan documents name stays in force.

The package shows the first and the third as figures beside the requirement: the coverage for the period, and the escrow and reserve balances tied to the lender statement. How the coverage figure is worked out is in debt service coverage ratio for an apartment building. The reserve balance is tied out as in replacement reserves on a multifamily loan.

What a covenant requires of you, and what follows if one is missed, are questions for your attorney.

How do you build a multifamily lender package from the monthly books?

List every report and due date from the loan documents. Close each month on time. Then print the period's reports from the books, add the coverage calculation, and have the owner sign.

1. 1Read the financial reporting section of your loan documents. Write every report and its due date into the calendar table above.
2. 2Close each month on time: every bank account reconciled, the rent roll tied to the bank, the loan payment split as the lender statement shows.
3. 3Print the period's reports from the closed months: the operating statement, the rent roll dated the last day of the period, and for the year the balance sheet.
4. 4Add the coverage calculation, and the escrow and reserve balances tied to the lender statement, each beside the figure the loan documents require.
5. 5Have the owner sign the certification the loan documents call for, then send the package by the due date and keep a copy with the loan file.

Step 2 is the whole job. A package built from 3 or 12 closed months is a print job. A package built from 12 months of unreconciled bank lines is a cleanup first and a print job second.

What does a sample lender package look like for a 50-unit apartment building?

Birch Way's quarter: $204,450 of rent, $81,000 of operating costs, $123,450 of net operating income, $100,500 of loan payments, coverage 1.23, and 47 of 50 units rented.

Here is the cover page of a quarterly package and an annual package for Birch Way, with every month the same as the month on our home page calculator: $68,150 of rent, $27,000 of running costs, $41,150 of net operating income and $33,500 of loan payments. The quarter is 3 of those months and the year is 12. The reports behind the cover page are the ones in the 2 checklists above.

Birch Way, a quarter, invented data

Birch Way, a year, invented data

Coverage is 1.23 for the month, the quarter and the year, because every month is the same in this sample. In a real building the months differ, and the quarter and the year each get their own figure.