Life companies are increasing their lending on apartment building investments says MFE Magazine.
Life insurance companies upped the ante last year, processing apartment building investment loans hand over fist. And this year, most have increased their appetite and are charging through the first quarter at full speed, giving the government-sponsored enterprises (GSEs) a run for their money.
Most life companies today have the ability to be competitive with, and sometimes price inside of, the GSEs. This is particularly true for lower-leverage deals—and the most desirable assets.
But it’s not just attractive pricing—life companies also offer the ability to lock a rate at application, weeks ahead of the GSEs. And life companies can underwrite deals in a more flexible manner—pre-stabilized assets aren’t turned away, as they are by the GSEs. Whereas the GSEs hold fast to the “90-for-90” rule—that a property must be 90 percent occupied for at least 90 days to get a loan—these balance-sheet lenders aren’t bound to trailing numbers.
“I think our niche in the market is taking a little bit of construction risk or leasing risk or repositioning risk as a way to compete with the agencies,” says Hood. “We can offer the ability to fund while the property’s in lease up…”
See the whole MFE article here: Life Companies Increase Allocations and Target Multifamily
2 thoughts on “Life Companies up their Apartment Building Investment lending, competing with Fannie/Freddie on rates, quicker rate locks and easier terms”
Got a 208 unit complex in Lake Charles with current senior bank loan and junior SBA second. Will a life company permit the SBA second to remain in place considering a 60% LTV first with a 200% coverage?; Property value is estimated at $9,800.000 with a $5,900,000 senior amount.
Great question LG, we have been funding through Fannie, Freddie and HUD the last three years or so and we don’t have any properties in the Lake Charles area. I know HUD will allow some seconds to remain in place with their 223(f) loan, have you looked into going that way? I don’t have any lender contacts in your area but you can pull up the current HUD MAP (Multifamily Accelerated Processing) approved lenders list at http://portal.hud.gov/hudportal/documents/huddoc?id=aprvlend.pdf