18A — August 16 - 29, 2013 — Mid Atlantic Real Estate Journal
M ultifamily F inancing
By Brenner Green, Real Property Capital, Inc. The Current Commercial Mortgage Market
f you heard a recent “THUMP THUMP” while sitting in your office one
breath… and then business pretty much went back to normal and soon thereafter
in the April issue, better get your deal done sooner than later before rates go up. Even if nobody reads my article, the Fed got a lot people’s attention (even if flat in the road). The dramatic interest rate run up we experienced in June has done little to noth- ing to slow the demand for multifamily loans from both borrowers and lenders. It is an interesting time in the market in that there is as wide an ar- ray of products available from as diverse a group of capital sources as ever before. From
the agencies to conduits to banks large and small, insur- ance companies and credit unions, bridge, mezz and eq- uity, there is a lot of money out there chasing apartment and student housing deals. All of these players have their niche, and are still somewhat picky (although hungry) as a hangover effect of the reces- sion that is quickly fading into distant memory. This year our firm will close multifamily loans with close to a dozen different lenders, as opposed to the traditional handful of “go to” guys The run up in rates has cre- ated an oddly imperfect mar- ket. The lenders who sell their loans (agency and CMBS) are forced to price in real time over treasury or swap rates, and as such these lenders’ rates have increased by about one percent since May. Life companies rates have moved less dra- matically because in that they adjust their spreads to meet their loan volume goals in nor- mal times so they can absorb some spread tightening (lower profitability) to match increas- ing bond yields. Meanwhile, some banks are at the other extreme, and seem to stick a finger in the air and pick a rate depending on which way the wind blows on any given day, regardless of what is going on in the Treasury bond market. One would assume that should Treasury rates continue on at current levels, the portfolio lenders will have to increase rates and the market will find relative equilibrium. However, at present there is a severe dis- connect and thus an imperfect market. Finding the best deal for your particular need as an investor is going to be very difficult in this day and age without some professional help. All of these lenders, pric- ing aside, have an important role in the market. Leverage, term, geography, recourse, etc. all come into play. Unless you are speaking to themweekly if not daily, it is virtually impos- sible to keep track. R. Brenner Green is a 15 year veteran in com- mercial real estate finance and president of Real Prop- erty Capital, Inc., a full ser- vice commercial mortgage banking firm based in the Philadelphia suburbs. n
head-like withdraw symptoms that sent yields at the long end of the curve skyrocketing.
day a little over a month a g o , t h a t sound was Ben Bernan- ke get t ing run over by the commer- c i a l mo r t - gage bus that
Finding the best deal for your particular need as an investor is going to be very difficult in this day and age without some professional help. All of these lenders, pricing aside, have an important role in the market. Leverage, term, geography, recourse, etc. all come into play. Unless you are speaking to themweekly if not daily, it is virtually impossible to keep track.
continues down the highway at full speed. The Fed’s first effort to douse the free money inferno was met with crack-
got even busier thanks to the little wakeup call. As I said
For a minute, it looked like it could be bad. We took a deep
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