Apartment building investment loans in 2014, thoughts and predictions on what’s in store from lenders large and small and the organizations who represent them:
Greystone via MultiHousingNews: We do think there will be more capital available,” says Bob Barolak, co-COO at Greystone. Lenders will become even more eager to make loans in the multifamily space, he says, because of greater confidence in the economy and markets.
Another major reason for an expected bump in capital available in the next 12 months is that CMBS financing has come back into the multifamily sector—from a volume of practically zero in 2012. They will continue to increase market share significantly in 2014.” Currently, CMBS multifamily financings are carrying interest rates of about 5.10 to 5.20 percent, or about 10 to 15 basis points lower than rates in Fannie Mae transactions, according to Barolak.
Maximum LTVs on CMBS loans—up to 75 percent on 10-year terms for multifamily properties—have also become competitive with those of Fannie and Freddie loans. Moreover, CMBS lenders can become “extremely aggressive” for deals they want to acquire to round up a securitization pool, Barolak says. In such instances, “they can dramatically lower the interest rate significantly below what Fannie and Freddie will offer.”
Happy New Year everyone. It’s hard to believe we’re almost half way to another new year (Lunar, on Jan 31st) but these past weeks have been busy here at Ashworth. In addition to working with our apartment building investor clients there have been a number of conferences, webinars, articles and other news reports looking into that murky ball that is the future. Let’s begin with a data dump of the things I’ve been seeing and then we’ll discuss what it all means.
Starting with the bigger picture items, on the Institutional Property Advisors – Marcus & Millichap Research call earlier this week they had a chart showing that house payments are forecast to remain higher on average than apartment rents in 2014:
Happy New Year everyone. Loan rates from the lender we track have risen over the last few weeks as the ten year Treasury (T10) has climbed about 25 basis points (bp) and the spread between the two has widened about 10 basis points. At 221bp though it remains tighter than a year ago when it ranged in the 270bp area.