Prudential Mortgage Capital Co. seeks to capitalize on a multifamily market that is benefiting from people putting off homeownership.
“We believe that will continue to be the case for the next three to five years,” says Jim Hensley, a principal at Prudential Mortgage’s multifamily team. “We wanted to expand our capability in this area.”
Expansion is occurring. The Newark, N.J.-based commercial mortgage lending arm of Prudential Financial (PRU) named Patrick McAllister and Laurie Morfin as directors of multifamily originations.
McAllister, based in the company’s San Francisco office, and Morfin, located in a new Carlsbad, Calif., office, are responsible for originating loans nationally. Both were directors at Wells Fargo Multifamily Capital (WFC) before joining Prudential.
Prudential Mortgage holds more than $72 billion in assets under management as of the end of the second quarter. The company maintains a mortgage servicing portfolio of about $69.2 billion.
It recently originated a $10.5 million Fannie Mae loan for an affiliate of Palatine Capital Partners Management to finance the purchase of a Jacksonville, Fla., apartment community.
A slowdown in job creation and ongoing tight loan availability has dampened commercial real estate growth with the exception of the multifamily sector. The National Association of Realtors expects vacancy rates in the apartment rental market to drop from 4.3% in the third quarter to 4.2% in 3Q 2013. Vacancy rates below 5% are considered a landlord’s market.
Homebuilder and developer sentiment regarding conditions in the apartment and condominium market improved for the eighth consecutive quarter, according to the National Association of Home Builders.
“The multifamily market has been a strong performer in the current economic climate as people choose to rent, putting off homeownership due to concerns about the job market following the 2008 financial crisis,” Hensley says.
Those concerns prevent people from saving for homeownership, which real estate data provider Trulia says is 45% cheaper than renting.