Fannie, Freddie may face competition in multifamily financing
Fannie Mae and Freddie Mac still dominate the financing landscape for multifamily properties, but more competition is starting to come from life insurance companies, national banks, financial firms and structured financing vehicles in the form of commercial mortgage-backed securities, Jones Lang LaSalle said in a new report.
And it seems a great deal of that financing is being funnelled directly into apartment projects.
Jones Lang LaSalle alone completed nearly $1 billion in multifamily financings through Freddie Mac in 2012, the firm said.
While other outlets are starting to invest in the multifamily segment, the GSEs are still braced to dominate financing within the segment through 2013.
"Plentiful capital, ease of execution, and the ‘sweet spot’ in the 7- and 10-year, fixed-rate, 80% LTV financings kept the agencies on top in 2012—with Freddie Mac sourcing roughly $29 billion and Fannie Mae topping out around $33 billion," said Faron Thompson, international director and leader of Jones Lang LaSalle’s Freddie Mac Program Plus lending business.
Jones Lang LaSalle's largest Freddie Mac seller/servicer financings from 2012 included a $93.1 million refinancing on the Crystal Square apartment development in Arlington, Va.; a $68.3 million refinancing of The Bennington in the same city and the $46.5 million financing of Grosvenor Tower in Rockville, MD.
Thompson said, "We probably won’t see any significant agency reform until at least 2014 because right now, Fannie and Freddie are garnering solid returns, doing a good service and continuing to help the economy. Debt capital is ‘all in’ to the multifamily financing game, with the pipeline from nearly every lending source expected to grow."
Freddie Mac on Monday released its list of the top producing multifamily mortgage sellers of 2012. The list outlines the firms that transacted the most financing volumes with Freddie Mac. Through these lenders, Freddie said it settled a record $28.8 billion in new multifamily volume for 2012, resulting in $21 billion in mortgage securitizations.
The list of Top Sellers included CBRE Capital Markets with a volume of $6.2 billion; Berkadia Commercial Mortgage with a volume of $3.6 billion; Wells Fargo Multifamily Capital with a volume of $2.4 billion and Walker & Dunlop with a volume of $2.3 billion. NorthMarq Capital ranks fifth with a volume of $1.9 billion.
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