The cash-out refinance is a 10-year loan with interest-only payments for the first two years, and has a leverage point of roughly 70 percent. Cushman & Wakefield’s Baxter Fain, Christina Grimme and Sarah Dinning — based out of the brokerage’s Denver office —negotiated the debt. 

The portfolio comprises 1,969 units in Arkansas, Texas, South Carolina, Indiana and Missouri.

“This is the single largest transaction in our company’s history. Closing a deal of this magnitude in a challenged 2020 debt market speaks volumes about the efforts of our team,” Jeffrey Plummer, a managing director of Eighteen Capital Group, said. “We’re thankful for the opportunity to have worked with great partners on this transaction and for being able to deliver an important and successful debt execution for our owners.”

“This was a critical portfolio to refinance for the client in this environment,” Fain added. “The significant cash out, in addition to locking in a historically low interest rate, positions the sponsors very well for the next 10 years in addition to providing liquidity to look at opportunities in the coming months and in 2021.  The client’s expertise in turning around broken and heavily distressed assets was evidenced in this refinance and will help them in buying new deals as they come available.” 

Kansas-based Eighteen Capital Group is a multifamily investor with a focus on value-add opportunities. Founded by Scott Asner and Michael Gortenburg, the firm owns 6,865 units in 20 markets today.

Officials at Greystone weren’t immediately available for comment.

The collection of 10-year loans includes five years of interest-only payments under secured overnight financing rate-based floating rates, as per information from Meridian. 

HGI President T. Richard Litton Jr. said in a statement that the firm “continues to implement its proven investment plan for the properties in the Beacon Portfolio. We always look for opportunities to improve upon our assets’ financing terms, which, in turn, allows us to more effectively implement our investment plans and provide returns to our investors.”  

Litton added that HGI has been a longtime client of Freddie Mac, as a “borrower, preferred equity partner and B-Piece investor. [Our] strong, consistent record, when it comes to closing many types of transactions, is key when it comes to securing attractive financing.”

HGI had originally acquired these eight assets as part of its $1.8 billion purchase of the 24-property, 9,407-unit Beacon Portfolio from Dallas-based private equity firm Lone Star Funds in November 2017, as per information from HGI and reporting from the time of the sale. Meridian had originally advised HGI in securing debt and purchasing the Beacon Portfolio from Lone Star in 2017. 

Meridian Capital’s Abe Hirsch, Zev Karpel and Sean Anderson arranged the debt financing out of the firm’s New York headquarters. Capital One’s Michael Maidhof and Molly Steckler spearheaded the bank’s origination. 

“This transaction achieves several important objectives in reducing interest expense, extending interest-only for five additional years, and capitalizing on the competitive environment in the agency lending space,” Hirsch said in a statement.

Maidhof added that the new financing “will allow Harbor Group to further effectuate its business plan and continue to improve operations and cash flow at each of the properties.” 

The eight properties are located in Maryland, Virginia, and Pennsylvania, and comprise a total of 3,227 units, which range from studios to three-bedroom residences. 

The portfolio includes Braddock Lee Apartments in Alexandria, Va.; Cinnamon Run at Peppertree Farm, which counted as two properties in the deal, and Westchester West, both in Silver Spring, Md.; New Orleans Park Apartments in Secane, Pa., just southwest of Philadelphia; Ridley Brook Apartments in Folsom, Pa.; and Racquet Club East and Racquet Club South apartments in Levittown, Pa., between Trenton, N.J., and Philadelphia. 

The suburban apartment complexes feature in-unit amenities, such as washers and dryers and private patios and balconies, while each site has community offerings, such as playgrounds and swimming pools, as per Meridian. 

The 10-year, floating-rate mortgage, which includes five years of interest-only payments, went toward the JV’s buy of the 297-unit Century Cross Creek complex in Tampa. The partnership is planning to rename the asset The Parq at Cross Creek. 

Berkadia Senior Managing Director Mitch Sinberg and Senior Analyst Abigail Beauchamp, out of the firm’s Boca Raton outpost, arranged and secured the financing on behalf of the borrowing partnership. 

“Tampa Bay’s diverse job growth has made it one of the most attractive places for economic and real estate development in the nation,” Sinberg said in a statement. “Even among small businesses, the area outpaced much of the U.S., with gains in employment that show promising signs of growth that reinforce strong multifamily fundamentals.”

Robbins and LEM are planning to deploy funds as part of a value-add strategy to upgrade the asset’s interiors, exteriors, and community amenities.

Built in 2008, the property is located at 10821 Cross Creek Boulevard, which is about 20 miles northeast of downtown Tampa, near the massive Lower Hillsborough Wilderness Preserve. The asset is near local schools and a sizable grocery-anchored retail center, and it is also situated about 15 minutes away from both the Hidden River Corporate Park and the master-planned Tampa Oaks Office Park, which feature large corporate employers like Johnson & Johnson and Liberty Mutual, respectively. 

The gated complex, which saw the addition of three more residential buildings in 2014, sports one-, two- and three-bedroom residences, with monthly rents starting at just over $1,000 for the one-bedrooms to nearly $1,700 for the three-bedroom units, according to listing information on Apartmentguide.com. 

Amenities at the location include detached, rentable garages; a car care center; a resident’s lounge with games; a coffee shop; a fitness center; a swimming pool’ a tennis court’ a “summer kitchen” with picnic areas; a child’s play area; a dog park and pet spa; and Amazon HUB lockers, according to the property’s website and information from Berkadia. 

Officials at Robbins and LEM did not immediately respond to calls requesting comment.

The seven-year, Freddie Mac-backed financing, which JLL Real Estate Capital — a licensed Freddie Mac Optigo lender — went toward Treeline’s roughly $154.1 million purchase of Bell Summit at Flatirons, a sizable rental property located in Broomfield, Colo., a growing suburb located between two of the state’s main metros, Boulder and Denver. 

Treeline bought the asset from Greensboro, N.C.-based multifamily investment and management firm Bell Partners in a transaction that was closed just a couple days before Thanksgiving last year, as per area public records. 

The deal was the largest multifamily trade in the area in 2020, according to a December report from the Broomfield Enterprise. 

JLL Capital Markets represented Bell Partners in the sale of the property and also arranged the acquisition financing for Treeline. JLL’s Jordan Robbins and Pamela Koster represented Bell Partners, while Josh Simon and Rob Bova worked on behalf of Treeline. 

Built in 2004, the property is located at 210 Summit Boulevard in Broomfield. Its 500 units include one- and two-bedroom residences, ranging in size from 716 to more than 1,400 square feet, with in-unit laundry. It also sports a range of amenities, including a saltwater pool open year-round, a jacuzzi, two dog parks, a fitness center with classes, a yoga studio, a coffee bar, barbecue areas, a playground and covered parking for residents, among a few other offerings, as per information about the property via a website hosted by Denver-based national multifamily management firm Mission Rock Residential. Mission Rock was tapped before the end of the year by the new owners to manage the asset, according to an announcement on Dec. 30.

“This community offers a prime location in the Denver and Boulder metro area, and we are thrilled to be able to bring our Mission Rock standards to residents right here in our own home city,” Mission Rock President Patricia Hutchison said in a statement as part of the announcement.

The Dec. 30 announcement also indicated that Treeline rebranded the property Summit at Flatirons, dropping the word “Bell” from the name, which was a reference to the previous ownership. 

Bell Partners bought the complex in 2016 — then called AMLI at Flatirons — for just over $116 million, according to public records and previous reporting on the transaction. The previous year, the firm made a splash with its purchase of the 1,206-unit The Horizons at Rock Creek — later renamed Bell Flatirons — for $255 million, which, at the time, was the largest multifamily purchase ever made in the state of Colorado, according to a 2015 report from the Denver Business Journal. The massive Bell Flatirons complex is located right across the street from Summit at Flatirons. 

The same year that Bell Partners acquired Summit at Flatirons, the firm deployed more than $13 million to renovate the units and common areas. That work included the addition of stainless-steel appliances, vinyl plank flooring, quartz countertops, fresh lighting, a relocation of the site’s fitness center and yoga studio, as well as upgrades to the fitness equipment and bike storage area, as per information from JLL.

Monthly rents at the property currently range from just under $1,400 for one-bedrooms to around $2,250 for two-bedrooms, according to listing information from Apartments.com.

PGIM Managing Director Jaime Zadra, along with Executive Directors Robert Younkin and Garrett Meyers and Senior Investment Analyst Nikki Mooney, arranged and originated the debt.

Younkin said in a statement that “despite the COVID-19 pandemic, both properties and their surrounding markets have continued to perform well, given their optimal locations and the amenities that they offer residents.” 

The Arbors of Las Colinas is a 408-unit property located at 1000 San Jacinto Drive in Irving, a suburb about 16 miles northwest of downtown Dallas. It is TrueAmerica’s first investment in Texas, and the firm plans to renovate and upgrade each of the site’s one-, two- and three-bedroom residences.

Its location puts it near ample green space and a variety of shopping, including a Kroger, a Target and a Whole Foods Market, which is located right across the street from the property. The Arbors of Las Colinas is also near a Microsoft Corporation office, a corporate office for energy company Vistra Energy, and a large medical office complex.

Monthly rents at the property currently range from around $870 for one-bedrooms to nearly $2,300 for three-bedrooms, according to listing information from Apartments.com. 

The Bella’s 200 units include one- and two-bedrooms, with monthly rents ranging from a little over $1,000 for the former to almost $2,800 for the latter, according to Apartments.com; like its purchase in Irving, TruAmerica is going to deploy a renovation campaign to upgrade these units. Despite the pandemic, The Bella has been able to maintain its occupancy at around 95 percent in the last 12 months, according to information from PGIM.

Community amenities at the property include a fitness center, a pool, a media center and a movie theater with a film library, among other offerings, according to the property’s website. 

The site is located at 13616 North 43rd Street, just north of Phoenix’s central business district in the Paradise Valley Oasis area, surrounded by a range of food and beverage and shopping outlets, including grocery-anchored retail, as well as park space.

The lending program will target value-add and new construction assets nationwide.

Richard Litton, president of HGI, told CO equity raise multifamily initiative began at the start of the COVID-19 pandemic in late March, when it was determined that other debt players faced challenges with loans in the hospitality and retail sectors. Litton noted that HGI had always had eyes on originating multifamily loans, prior to the pandemic, after 35 years of investing in the sector on the buy and sell side.

“We are so active in the multifamily market anyway on the buy and sell side, and we were getting a lot of data points in the industry that there were not nearly as many active bridge lenders,” Litton said. “We closed our first loan in August and felt like, with the pipeline that we had, that we could complete a large equity raise and work toward equity capital that would support up to a billion dollars in loans over the next year.”

Litton noted that many new apartments in the works prior to the pandemic were tied to construction loans, with the properties not stable enough to receive Freddie Mac or Fannie Mae loans, making bridge financing an effective tool for these assets. He said overall demand for multifamily housing should remain strong in the U.S. in 2021 and beyond, especially in suburban areas.

HGI has been sourcing and managing debt investments for more than a decade to go along with its real estate portfolio. The Norfolk, Va.-based firm has made preferred equity investments and mezzanine loans on multifamily properties across the U.S., and is also one of the largest buyers of Freddie Mac multifamily subordinated debt positions.

In November, HGI nabbed a $513 million Freddie Mac loan to refinance a bundle of eight multifamily assets in the mid-Atlantic region.

“As a well-known owner and operator with a strong understanding of the U.S. multifamily market, HGI has the ability to approach lending transactions with a comprehensive perspective that gives them a unique advantage,” Geoffrey Souter, managing director, head of real assets credit at CPP Investments, said in a statement. “We look forward to continuing our relationship with HGI to address a growing market need.”

Update: This post has been updated with additional background and quotes from the HGI president 

Toye, who has two decades of experience in commercial real estate finance, said he was also drawn to JPMorgan Chase after the bank made a $30 billion commitment toward advancing racial equity by providing loans, equity, and direct funding for promoting and expanding affordable housing and homeownership.

“I look forward to playing a role in the firm’s efforts to make a positive difference in underserved communities,” he said.

In his new role, Toye will be responsible for growing a national team that provides JPMorgan Chase’s commercial real estate clients with access to a broader suite of lending and credit solutions through government-sponsored enterprise partnerships.

At Wells Fargo, Toye served as executive vice president and group head for community lending and investment. Previously, Toye was head of production for Wells Fargo Multifamily Capital, where he managed the government-sponsored enterprise originations team. In this position, he was also tasked with increasing production, along with overseeing Wells Fargo’s relationships with Fannie Mae and Freddie Mac.

“Vince’s experience in the industry, his proven leadership, and ability to build strong teams will be a tremendous value-add to our clients, as we look to deliver an expanded breadth of financing solutions in the year ahead,” Brooks said. “He has a great track record of going above and beyond for his clients, taking the time to understand their specific needs, and tailoring financial solutions to achieve their desired outcomes.”  

Toye received his MBA from the Wharton School of the University of Pennsylvania and his bachelor’s degree in aerospace engineering from the University of Virginia.

JLL Capital Markets was tapped on behalf of New York-based Invictus to arrange and originate the loan, while the debt will be serviced by JLL Real Estate Capital, an arm of the firm that holds designation as a licensed Freddie Mac lender under the agency’s Optigo program. Scott Aiese, Peter Rotchford, Alex Staikos and Brendan Collins from JLL Capital Markets arranged the debt. 

“The Berkeley at Waypointe and Quincy Lofts are highly attractive multi-housing assets with Class-A amenities and easy access to New York City,” Aiese said in a statement. “The two properties will benefit from the growing population of renters seeking alternatives to New York City that offer high-end amenities and a dynamic community of nearby restaurants and retail.”  

JLL is one of a number of traditional brokerage houses that have expanded to include an agency lending platform, putting them directly in competition with many of the lenders with which their respective advisory practices have worked alongside or served. Newmark has established such a lending platform, and Meridian Capital Group, one of the largest commercial real estate debt and equity advisory firms in the country, recently bought Barings Multifamily in a move to enter the fray of direct multifamily agency lending. 

As a relatively new, two-building development that was constructed in 2017, the site includes The Berkeley, a five-story, 129-unit property with more than 10,000 square feet of street-level retail space and a parking garage with 371 spaces, as well as Quincy Lofts, a second, five-story building with 69 residences and 87 parking spaces on the ground floor, according to information from JLL. 

The broader name of the project is tied to a sizable 464-unit, mixed-use rental development called The Waypointe that is adjacent to The Berkeley and Quincy Lofts at 515 West Avenue. Invictus bought The Waypointe in August 2020.

The location of the asset provides for about an hour drive into Manhattan, and also for access to the Metropolitan Transportation Authority’s Metro-North Railroad South and East Norwalk train stations.

Current monthly rents at The Berkeley at Waypointe and Quincy Lofts range from around $1,700 for one-bedrooms to about $5,400 on the upper end for two-bedroom apartments, according to listing information on Apartments.com. 

The financing came via the issuance of $64 million in tax-exempt bonds and 4 percent federal low-income housing tax credits (LIHTC) from the area’s housing authority, Collier County Housing Finance Authority. Regions Bank stepped in as the LIHTC investor, while Berkadia acted as the bond purchaser, backed by Freddie Mac, sources told CO. 

The LIHTC program was created in 1986 as a way to spur developers to create more affordable housing units by providing tax incentives; the program is superintended by the Internal Revenue Service. Fairstead’s purchase and financing will maintain affordability at the property for at least the next four decades, per information from Fairstead. 

Goodlette Arms rents to seniors and individuals with disabilities, and it has a management office that provides “a variety of supportive services to residents, including health and wellness programs, on-site meals, five-day-a-week van transportation to doctor’s appointments, pharmacy visits, supermarket trips and other errands, education programs,” among other “activities,” according to Fairstead. 

Fairstead’s $25 million renovation plans include upgrading all of the site’s 250 residences, as well as common areas, with a slant toward “energy, sustainability and property resiliency measures,” per information from the firm. 

“Naples is an amazing town, a great place to live, especially for seniors, and our purchase and subsequent renovation of Goodlette Arms Apartments will ensure that there are much-needed high quality, affordable options within this wonderful community,” Will Blodgett, Fairstead’s founding partner, said in a statement. “We are beyond grateful to be able to provide the area with a first-class senior residential complex, and continue to allow Goodlette Arms’ residents to live affordably, safely and independently with great comradery and amenities for many years to come. We look forward to being a part of this wonderful community.”

The firm’s vision includes fountains and waterways on site, an upgraded community center, a fitness center, a salon, a computer lab and an area for bike storage. The redevelopment will also see each of the unit’s kitchens, bathrooms, flooring, lighting, and heating, ventilation and air conditioning systems upgraded. The firm will also usher in new outdoor amenities, such as a community garden, lighted walking paths and equipment that will facilitate outdoor exercise. Fairstead also has a goal to reduce the property’s carbon emissions by more than 30 percent over three years. 

Newmark Multifamily Capital Markets’ Henry Stimler, Bill Weber and Matt Mense, alongside Osman Baig, originated the debt for ALA, while Newmark’s Dave Gutting and Derrick Bloom brokered the sale between the two parties. 

Both assets were built in 1985 and feature one-, two- and three-bedroom units, per Newmark. The Everette at East Cobb is located at 1675 Roswell Road in Marietta and sports a mix of 312 multifamily residences, while The Franklin at East Cobb is a 380-unit complex at 875 Franklin Gateway SE.

The Everette’s amenities include outdoor grilling areas, a pool with a sun deck and a poolside fireplace, an outdoor kitchen area, a lounge area, a fitness center and a dog park. The gated complex that is The Franklin sports a central clubhouse building, a business center, a fitness center, a pool and sundeck, a pet park, a playground, and barbecue and picnic area for residents. 

The properties are located about 16 miles northwest of Downtown Atlanta, just east of the center of Marietta, and they are surrounded by a bevy of food and beverage and shopping outlets, including grocery and park space. They are also approximate to Kennesaw State University’s Marietta Campus and a range of employment drivers.

Monthly rents at both properties range from around $1,000 for one-bedrooms to north of $1,500 for the three-bedroom residences, according to information from the properties’ respective websites. 

Newmark’s John Heimburger, Christine Espenshade, Dean Smith, Sean Wood, Alex Okulski, Jason Kon and John Munroe brokered the sale. Multifamily capital markets professionals Henry Stimler, Bill Weber, Matthew Mense and Daniel Sarsfield arranged the debt financing on behalf of HGI. 

HGI has dipped its foot back into North Carolina with the purchase, a deal that follows a larger, $1.85 billion acquisition of a portfolio of nearly 13,500 units and 36 properties from Aragon Holdings that HGI closed and announced in January. That deal brought HGI’s multifamily portfolio up to about 50,000 units, and this new deal with McDowell and Angelo Gordon has allowed the firm to eclipse that, at a time when the multifamily sector has continued to exhibit strength amid ongoing economic uncertainty. 

“[The portfolio drew] interest from a deep pool of domestic and international capital sources … the scale of the opportunity, the unit renovation upside and the strength of the rental market fundamentals in the properties’ [metropolitan statistical areas] all galvanized buyer interest in this portfolio,” Newmark’s Heimburger said in a statement. “HGI’s track record of portfolio execution success and strong desire to re-enter the Carolinas multifamily market gave us confidence in their ability to close the transaction on time at the contracted price.”

The bundle of assets includes seven properties in North Carolina and one in Virginia. There’s Harlowe Apartments and The Residences at West Mint in Charlotte; 200 Braehill Apartments, The Corners at Crystal Lake and Mill Creek Flats in Winston-Salem; 7029 West Apartments in Greensboro, N.C.; Woodlake Reserve in Durham; and The Samuel Apartments in the coastal town of Hampton, Va., which is located just north of Norfolk.

The garden-style apartment complexes, which were built in the 1990s, will get a $13 million injection as part of a capital expenditure program to renovate and modernize each of the properties, according to Newmark. 

Stimler said in a statement that his team is “grateful to continue to foster our very strong relationship between Newmark and HGI, on both the sale side and the financing side,” adding that it’s been alongside HGI helping it to “seamlessly acquire portfolio-sized transactions like Piedmont and last year’s $2 billion Aragon portfolio to build out their national brand.” 

The transaction was negotiated by Meridian Capital Group Senior Vice President Jake Handelsman, who is based in the company’s Boca Raton, Fla. office.

“We recently closed a complex bridge deal for this client, so when this deal came into play, we decided immediately that a floating-rate Freddie Mac loan was the way to go,” Handelsman said in a statement. “The fact that we were able to obtain such a favorable rate in today’s market with rates shifting so rapidly as well as providing capex gave the client the comfort to take on a longer-term loan. This closing went smoothly from start to finish thanks to our close relationship with the borrower and the strong relationship with the lender.”

Officials for KeyBank and SYM Investments did not immediately respond for comment.

Located at 100 Avalon Gates, The Royce at Trumbull is a 340-unit, multifamily community consisting of 11 three- and four-story buildings. The asset, built in 1997, features one-, two- and three-bedroom apartments averaging approximately 1,100 square feet. 

The property’s common amenities have been recently upgraded to include a new clubhouse; a two-level fitness center with a yoga studio; an upgraded, outdoor swimming pool; indoor basketball court; a billiards lounge and children’s play areas.

In 2020, four of the top five Freddie Mac Multifamily lenders and three of the top five Fannie Mae Multifamily loan producers were global advisory firms — Newmark included, with CBRE leading the pack among its peers. (CBRE has been a mainstay in the space for about a decade.)

Over the last several years, many medium-to-large national and global advisory firms, like Newmark — and, most recently, Meridian Capital Group — have been methodically scooping up agency lending licenses, or more agency debt and equity advisory strength, by way of strategic partnerships or M&A activity, vaulting them into very advantageous positions in the market. 

These companies marry their robust, innate investment sales and debt and equity advisory businesses with that of agency loan origination power to provide the cliched “one-stop-shop” for multifamily borrowers. They can run the buy and sell sides of a trade, and also quote, originate, and supply agency debt themselves, or use their inherent ability to source capital from a non-agency source for multifamily acquisitions, refinances or construction deals — life company, non-agency bank lender or debt fund, you name it.

They’ll run the entire process, no matter the outcome.

“It’s a huge advantage,” said Newmark Executive Managing Director Bill Weber. “There’s so much money chasing multifamily. It’s a great value proposition for borrowers; here’s the agency, life company and debt fund bid. The niche guy is not in such a good spot anymore.”

“It has changed the market, but has it moved it horribly? No, [not yet],” said one borrower who spoke to Commercial Observer anonymously. “But it already has changed the landscape.”

Meridian Capital, which had previously acted as somewhat of a massive feeder of agency multifamily loans to other finance companies, capped off 2020 with an announcement that it had partnered with Barings Multifamily Capital to create a formidable agency lending platform, which will be led by former Freddie Mac CEO David Brickman. That’s quite a coming-out party.

Newmark jumped wholesale into providing a full scope of advisory, loan origination and servicing in the agency multifamily realm in 2018 with its acquisition of BPC, which was a licensed agency loan provider. BPC, itself, had undergone its own expansion in the space, acquiring Oppenheimer Multifamily Housing & Healthcare Finance, from Oppenheimer & Co., in spring 2016, which gave it strong, dedicated Federal Housing Administration (FHA) origination capabilities on assisted-living, nursing homes and other health care-related multifamily properties.

Last year, Newmark came in as the fifth largest multifamily loan producer for both Freddie ($6.2 billion) and Fannie ($5.2 billion), after flirting with the No. 10 spot or thereabouts in previous years. 

JLL’s acquisition of HFF in 2019 also combined the strengths of two of the agency lending space’s top five to 10 more-active originators into what now seems like an unscratchable beast in the space. 

(Many advisory firms and lenders, and even the agencies, either declined to comment or did not respond to inquiries for this story.)

For a number of years, Willy Walker’s Walker & Dunlop (W&D) and Stephen Rosenberg’s Greystone — two important finance-first companies in the space — have built upon and expanded around their agency lending prowess, becoming two of the industry’s foremost multifamily financiers and servicers.

W&D has been expanding its profile in non-agency originations, acquiring debt and equity advisory practice AKS Capital Partners at the start of 2020, a firm that was started by finance juggernauts Aaron Appel, Keith Kurland, and brothers Jonathan and Adam Schwartz not long after the quartet departed JLL in summer 2019. It has also folded Denver-based subsidiary JCR Capital into its broader business to create a large investment management platform, Walker & Dunlop Investment Partners.

Walker “saw the writing on the wall,” one agency lending source told CO on the condition of anonymity to avoid any conflicts. The source was referring to the possibility that a firm like W&D could lose agency lending market share to these large advisory firms. (A representative of W&D did not respond to an inquiry.)

Greystone has made similar moves in the last several years to build out a more robust investment sales and brokerage network in response to the evolution of the agency lending market. (The firm was not able to respond to interview requests before publication.)

In 2014, Rosenberg’s company acquired Apartment Realty Advisors’ seniors housing group, which specialized in brokerage, investment sales and advisory. Two years later, Greystone formed a joint venture with Brown Realty Advisors to add more market-rate and affordable housing multifamily advisory power in the country’s burgeoning and LIHTC Advisors

Several years ago, in 2013, Berkadia Commercial Mortgage bought multifamily sales and investment firm Hendricks & Partners in a similar move. Berkadia also acquired the apartment brokerage Moran & Company at the start of 2021, adding to its fairly recent acquisitions of Central Park Capital Partners — a move that broadened its JV equity and structured capital capabilities —  and LIHTC Advisors, which added more depth for services for multifamily investors in the Low Income Housing Tax Credits (LIHTC) space.

That’s an area of multifamily finance that the agencies have been building themselves back into as well. In 2020, Fannie reached $1.5 billion in investment in the LIHTC space in its two years since jumping back into the arena in 2018.

“Companies like Arbor [Realty Trust] are trying to build brokerage networks by acquiring,” said one agency borrowing source that spoke to CO. “Greystone has done that … Berkadia was a financing company that bought Hendricks and got into the brokerage business.”

One agency multifamily intermediary at a large firm said that “historically, you had agency lenders and brokers … [For example], W&D was doing straight agency and Meridian doing straight brokerage. If you do one or the other today, you’re at a straight disadvantage.”

Another borrower who spoke to CO said that he believes an advisory firm like Cushman & Wakefield is easier to deal with on the agency advisory-only side, because they don’t have an adjacent debt origination division nipping at the borrower’s heels during the process, trying to nab fees in every conceivable way they can get them.

“Agency licenses are limited, and they are worth a ton of money,” said one agency borrower who spoke to CO on the condition of anonymity. “As long as Fannie and Freddie and HUD are your best avenues to finance multifamily, non-recourse and with good terms … [this will continue].”

Another agency lending source told CO that they “don’t think it’s a trend that’s going away.”

“If you’re not a top six [agency originator], and if you don’t offer sales and sales-driving financing, it’s hard to be a niche player,” the source said.

“As long as the fundamentals on the ground remain strong, that is going to create a lot of capital markets activity, in terms of sales and refinancings and the types of transactions that lead to bridge lending,” Litton said. “We’re seeing very good pipeline demand.”

Goldman Sachs was the sole structuring agent and co-lead manager for the CLO offering. JPMorgan Chase and Amherst Pierpont served as co-managers.

Of the $36 billion in CLOs outstanding at the end of April, more than 40 percent consist of loans secured by multifamily properties, with many accommodating lower-income tenants, according to the CRE Finance Council (CREFC). CLO issuance peaked in 2019 at $19 billion, before dropping to $8.7 billion last year during the COVID-19 pandemic, per CREFC data.

CREFC Executive Director Lisa Pendergast said CLO volume for 2021 is on pace to pass 2019 levels by mid-June, underscoring favorable market conditions where borrowers are attracted to the flexibility of shorter-term, floating-rate loans. Pendergast noted that many multifamily property owners prefer floating-rate vehicles as an option to address pandemic-induced revenue losses, and then they can later shift to a long-term, fixed-rate financing.

“It gives you so much optionality to be able to pay off that loan and move into a fixed-rate loan,” Pendergast said, “which is generally secured by what we consider to be stabilized assets.”

Pendergast noted that leverage on CRE CLOs remains fairly low, with bond spreads “more attractive” than securities in the fixed-rate, commercial mortgage backed securities (CMBS) space supported by more stabilized loans. She noted that CLOs have gotten a boost this year, largely because of investor appetite for higher spreads from lower-rated debt in a low yield environment, coupled with an increasing comfort level with these securities.

Litton said HGI’s multifamily loans leading up to the CLO have been “much more stabilized” in terms of occupancy rates, due to Fannie Mae and Freddie Mac reducing volume capacity this year because of lower regulated lending caps. If Fannie and Freddie’s volumes stay at current levels in the near term, Litton sees potential for growth in bridge financing as developers eye it as an alternate strategy to obtain construction financing on multifamily assets.

HGI completed a $245 million equity raise for the multifamily whole loan program in January, aided by a $110 million commitment from the Canada Pension Plan Investment Board (CPPIB). The Norfolk, Va.-based firm, which manages roughly $2.3 billion of real estate debt investments, had an inclination early on in the pandemic that multifamily investments in suburban markets was a prudent sector to hone in on.

“We had a high conviction that the sector would continue to perform well and that the bridge lending business would be another way to allocate capital to the apartment sector,” Litton said. “We intend to continue to leverage our deep multifamily expertise to be a CLO manager and bridge lender on a long-term basis.”

Värde Partners also launched a CLO this month with an aggregate initial principal balance of $929 million. The firm’s fourth CLO consists of 23 floating-rate mortgages secured by 29 commercial properties in the multifamily and hospitality sectors.

“We are at the beginning of a CRE CapEx cycle and we believe the nearly $4 trillion U.S. commercial real estate market presents a massive opportunity with favorable supply/demand dynamics,” Jim Dunbar, senior managing director at Värde, said in a statement. “COVID has accelerated a number of trends that are driving tenants to rethink how they utilize space and landlords to consider how they can improve their properties to attract tenants.”

The median existing home price rose 19 percent in April from a year earlier, according to data from the National Association of Realtors cited by The Wall Street Journal. Rising prices make it more difficult for first-time buyers to enter the market and build wealth.

Data from Freddie Mac in April indicated that the housing market was short of 3.8 million single-family homes. Now, a new report puts the total shortage of all homes at around 2 million single-family homes and 5.5 million units total, WSJ reported. 

The shortage could be one of the reasons single-family renters are seeing increased prices, though rent increases have not been evenly spread throughout the U.S. The Inland Empire saw single-family rents jump 18.3 percent year-over-year, while Miami saw just over a 10 percent bump. Los Angeles saw a slight decrease in single-family rents.

Occupancy of single-family homes was strong nationally at 96.6 percent in April — up 1.5 percent from a year ago. Miami saw the second-highest increase in occupancy at above 4 percent, while Los Angeles saw no occupancy change year-over-year. 

The limited supply of housing — especially after construction and land purchases were delayed during the pandemic — and growing demand has helped drive up prices. But another report from home remodeling site Fixr suggests that rising lumber prices could affect renters as build-to-rent homes could be more costly to construct. However, the cost of lumber has begun to come down in the past two weeks, reported WSJ.

Fixr spoke with construction industry professionals, who largely believe that couples with or without children are driving demand in the build-to-rent market. But, with a slowing adult population, the housing shortage might not be as large as it seems, according to WSJ.

The new platform is led by David Brickman as CEO and Jeff Lee as president. Brickman was formerly CEO of Freddie Mac, while Lee was previously the head of multifamily and head of underwriting and asset management at Capital One. 

In addition to Lee, NewPoint has hired six other multifamily heavy hitters to its senior management team, each with 20+ years of experience within multifamily and agency lending: Phil Spellberg, chief operating officer; Elie Tannous, head of capital markets; Joshua L. Schonfeld, head of affordable programs; Wayne Elibero, senior relationship manager; Bob Douglas, senior relationship manager; and Karu Arulanandam, head of affordable underwriting.

“I think it’s an incredibly exciting time to launch our new platform,” Brickman told CO. “What’s really unique and makes this a once-in-a-lifetime opportunity is the alignment of stars that’s occurred, in terms of this opportunity to start a new venture that’s also not truly new. It’s got this tremendous sponsorship in terms of established institutional partners: Meridian, a huge real estate juggernaut in the industry; Barings, also a significant player; and Stone Point Capital in the background.” 

“So, we’ve got this fantastic sponsorship behind us, each with deep roots in real estate, and yet, we have a brand new platform,” he added. “We have the ability to create something that will reflect not just where the industry is today, but where we think it’s going.” 

With its leadership’s deep roots in agency lending, NewPoint will provide Fannie Mae, Freddie Mac and U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) loans, as well as customizable financing and more tailored solutions for lending needs outside of the agency lending box. It will focus primarily on multifamily lending opportunities— both market rate and affordable — as well as senior housing, health care properties and manufactured housing. NewPoint also intends to reinvent multifamily securitization.

The platform launch comes on the heels of ever-increasing investor interest in the multifamily sector, which only underscored its accolade as a true, safe haven asset class during the COVID-19 pandemic and saw investors reallocate capital to it, away from asset classes languishing under the weight of the pandemic. 

“Multifamily continues to ride a tremendous wave,” Brickman said. “Investors see the need for multifamily housing in the U.S., and that the long-term prospects for rental housing in particular are extremely strong, so we’ll see continued construction and continued strong price appreciation.”

Brickman said that NewPoint is going to be able to distinguish itself from a swelling sea of competition on the lending side by leaning into management’s deep expertise and filling spots in the capital stack — emerging in a post-COVID world — that are too complex for conventional multifamily loan executions. 

“Given where pricing is in multifamily, and where conventional lending standards are, it’s hard to meet capital’s need with first mortgage debt as it’s currently done today,” Brickman said. “Preferred equity and mezzanine is part of [the solution], but actually, the bigger opportunity is rethinking part of the equation. So, is there a way to deliver some additional first mortgage capital by utilizing the capital markets? I think that’s going to be the greatest strength of this platform.” 

As such, NewPoint will be identifying pockets of capital to partner with and creating a new securitization vehicle to provide higher leverage for institutional multifamily product with strong sponsorship. 

“Multifamily has been underrepresented in CMBS for a long time,” Brickman said. “And I think there’s an opportunity to rethink securitization for multifamily. Certainly, that’s what we were able to do over at Freddie Mac, when we developed our securitization program, and I think there’s an opportunity to look at something similar in the non-agency world.” 

As for a timeline for a launch of a new securitization vehicle, “we have to crawl before we walk,” Brickman said. “But, our aspiration would certainly be by the end of this year.” 

After all, “in a lot of cases, you’re barely able to get 70 percent leverage in multifamily,” Brickman said. “Given the asset class and given its safety, we want to be able to figure out how to get to a little bit higher leverage — that, in turn, would make returns a little more attractive for investors, and from a debt perspective, I think that’s the real opportunity.” 

As for the new platform’s name? It heralds a new point of view and a shift from traditional multifamily financing to more efficient and innovative models. But, as Brickman said, this isn’t your typical startup, with the leadership team leveraging decades of experience as they embrace the next iteration of multifamily lending. 

“Our sponsorship, our network of connections and relationships, and our experience is really going to let us do some really great and innovative things that are going to be a really big deal in the market,” Brickman said. 

Meridian Chairman CEO Ralph Herzka is also chairman of the NewPoint board while president Yoni Goodman is a member of the board. Ben Silver, co-head of U.S. real estate at Barings, is also a board member.

“We are thrilled to be embarking on this new chapter. Our partnership with Barings will enable us to join forces with one of the world’s leading asset managers and reintroduce Meridian to the direct agency lending arena,” Herzka said in a statement. “With David Brickman’s leadership, vision and creativity, our goal is for NewPoint to quickly become a go-to platform for multifamily financing nationwide.”

“The closing of this transaction represents the next step in our roadmap for the growth and evolution of Meridian,” Goodman added. “As NewPoint is now launched, we will turn our attention to increasing its originations and product offerings, and to growing Meridian’s mortgage brokerage and investment sales divisions further on a national scale.” 

“Barings is delighted to have an ongoing role with NewPoint and its impressive team led by David and Jeff,” Silver said. “The combination of Meridian’s world-class origination capabilities and Barings’ extensive institutional strengths uniquely positions NewPoint to make a meaningful impact on all facets of multifamily finance.”

“We believe that the multifamily market will continue to grow in the second half of 2021 as the country and the economy rebuild after the challenges brought on by the COVID- 19 pandemic,” Steve Guggenmos, Freddie Mac’s vice president for multifamily research and modeling, said in a statement. “Underlying demand drivers will support strong multifamily market fundamentals and have set a foundation for continued growth as economic conditions improve.”

The Freddie Mac report noted that total multifamily origination volume for 2020 is still not known, with forecasting containing wide ranges due to a volatile year. The Mortgage Bankers Association has predicted $302 billion for 2020, which would equate to a 17 percent decline from 2019, but Freddie Mac said volume numbers could be as high as $365 billion.

The midyear outlook also showed that while large gateway markets like New York City, San Francisco, Washington, D.C. and Miami are still experiencing negative rental trends caused by the pandemic, nearly 90 percent of metro areas are expected to see positive rent growth in 2021. The vacancy rate is estimated to decrease to 5.0 percent, with rents predicted to rise 2.5 percent.

Demand for multifamily housing also now exceeds pre-pandemic levels nationally due to improved economic conditions and enhanced unemployment, according to the report. 

Andrew Coen can be reached at acoen@commercialobserver.com. 

There were more than 6,000 units leased than vacated in the second quarter this year, making it far and away the highest net absorption rate in a quarter since the start of 2019. For comparison, the same quarter last year posted negative absorption, with more than 2,000 net leases lost than gained. And, for the last quarter of 2019, when coronavirus was first reported, net absorption was over 1,000 units.

CBRE’s report shows a particularly significant reduction in Downtown L.A’s vacancy over the last 12 months, with vacancy falling 3.7 percentage points. West L.A., South Bay, San Fernando Valley and San Gabriel Valley also posted increases year over year.

At the end of June of this year, demand put L.A. County’s asking rent over $2,040, which is more than 3 percent higher than the third quarter of 2020 — the lowest point since before the start of 2019.

The national multifamily market is just as rosy for landlords and investors. A new Freddie Mac report shows that overall lending for multifamily investment is projected to break records this year.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com. `

“This refinance is an exciting step in our cycle of purchasing great real estate, renovating, and then refinancing and re-investing those funds,”  Richard Julian, CEO of Advanced, said in a statement. 

“In this pool were properties where we had already completed that cycle multiple times. […] The majority of the proceeds from this pool will be re-invested in our new Advanced Fund 21-2 which kicks off this month. We will also admit into this Fund our private investor network as well as new investors with a goal of raising about $125 million.”

The portfolio includes two properties in Anaheim: the 301-unit Beachwood Apartments and the 106-unit Sundial Apartments. The portfolio also includes 161 units at the Countrywood Apartments in San Bernardino County; the 421-unit Uptown Fullerton; the California Palms Apartments in Santa Ana; and Crestwood Apartment Homes in Lake Forest.

NorthMarq’s Michael Elmore, Alex Kane, Joe Giordani and Brendan Golding arranged the financing. The transaction marks nearly $3 billion in closings between NorthMarq and ARES, including the $240.4 million refinancing last year for a six-property multifamily portfolio with 1,223 units in Los Angeles, Riverside and Orange counties. Last October, Commercial Observer also reported that ARES bought a 346-unit apartment building for $130 million in L.A. County after securing a Fannie Mae $76.8 million loan with NorthMarq.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com. 

Commercial Observer Partner Insights: How would you characterize the state of diversity in commercial real estate today?

D. Edward Greene: Commercial real estate has lagged behind many other industries in terms of progress. I would say it has gone from very bad to bad.

I remember 20 years ago, when I entered the space, I went to a conference in Boston with about 800 attendees. As an African American, I think I saw two or three other Black people there. And I knew one of them because we went to school together.

Now, 20 years later, the industry is more diverse, but it still lags significantly. When you do find diversity, it tends to be at lower-level or back-office positions.

What do you think is the root of the problem in regard to CRE?

We haven’t looked at DE&I as a business imperative. A lot of companies have an archaic view of diversity. They treat it as a check-the-box exercise. Few companies have thought through how they can make it a sustainable effort or a competitive advantage.

What we’re trying to achieve here at Lument is to embed DE&I into everything we do, including making it an integral part of business performance. If I’m leading a business, my first question would be, “What am I missing in the marketplace?”

From a competitive standpoint, the world is changing very rapidly, and I need to know what may impact our business. What type of talent and skill set do I need so I don’t miss out on a trend? What can I do to improve my bottom line? Again, what am I missing?

Once the issues or emerging challenges are identified, we then ask how DE&I can be used to address these issues and challenges. Leveraging DE&I best practices to address key business issues and challenges not only helps us remain competitive, but also increases the likelihood of sustaining DE&I over time as it becomes embedded in our business practices. Many organizations do not approach DE&I this way.

Talk about some of your accomplishments in this area throughout your career.

When I worked for Freddie Mac, I served on its executive diversity and inclusion council and led one of its employee resource groups. In these roles, I gained a good understanding of the company’s diversity and inclusion strategy and the importance of leveraging diversity and inclusion to drive performance.

Simultaneously, I managed the affordable housing credit team. When I joined the team, I needed to build a team to help address some of the challenges we faced. Specifically, we needed to improve the customer experience, as well as speed and certainty of execution. To accomplish this, we needed to find the best employees with skill sets that would help address our challenges. I advertised to every, single demographic group, saying, “We’ve got great opportunities. We want to do great things here. You need to apply.”

My team — and this is unheard of in commercial real estate — was 70 percent women, and 62 percent ethnic minority. More importantly, by leveraging our diversity, we significantly improved the customer experience, improved speed and certainty of execution with quantifiable metrics, and introduced innovations that were well received and, ultimately, adopted by the larger credit division at the request of customers because of how well they worked within TAH.

I would also add that we had one of the lowest turnover ratios and a deep talent pipeline, even during periods when the larger division was experiencing turnover. All of these efforts positively contributed to our brand and productivity. In short, we leveraged diversity and inclusion as a strategic advantage to drive business performance.

Let me give you another example. At Freddie Mac, there was a transaction we had the opportunity to finance. One of my colleagues responded, “You do not want to invest in this property. In fact, I’m afraid to even drive to the neighborhood.” I went to another colleague and asked if she would visit the property. She was from Chicago, and she happened to be of the same demographic of residents of that neighborhood. When she returned from conducting a site inspection of the property and touring the neighborhood, she asked, “What is wrong with this property? I can’t understand why we’re not doing this project.”

Based upon her assessment, we ended up doing that transaction, which, in turn, led to an additional $60 million in business. The first colleague is a great friend of mine, and I can’t and won’t attribute anything negative to his character personally; however, we are all influenced by our environment, and he was unable to see an opportunity that another person from that demographic was able to see. This begs a question: “How much money are we leaving on the table just because we’re limited in our experience?” This is another example of how having a diverse and inclusive culture can positively impact business performance.

You work with affordable housing. Talk about some of the more prevalent industry trends you’re noticing these days.

There used to be a very stereotypical idea of what affordable housing is. But I think there’s a more comprehensive understanding now that it not only impacts low-income Americans, but middle-income Americans as well.

In addition to low-income Americans, many working-class, middle-income Americans are unable to afford rent in areas near their work. Many also spend a disproportionately high percentage of their disposable income on housing. This has helped raise awareness of the affordable housing crisis in our country.

Also, there’s a trend toward environmental, social and governance (ESG) investing. In recent years, significant capital has moved into this asset class. This, in turn, has introduced more investors to affordable housing as an asset class. This additional capital has positively impacted pricing within affordable housing finance. Last year, both Fannie Mae and Freddie Mac issued impact investment securities to meet the increased investor interest in this asset class.

Talk about some of the financial instruments Lument is planning to help further progress in these areas.

We’re working on products that will accomplish two things. The first is bringing more dollars into affordable housing. And the second is trying to figure out how we can lower the cost of capital that, in turn, can help produce more affordable housing.

I will also mention that many affordable housing properties have social service programs in place to support tenants. Through our corporate social responsibility initiatives, we are identifying opportunities to partner with our borrowers to support low-income tenants at the properties we finance.   

Ultimately, what are your long-term goals for Lument in terms of diversity, equity and inclusion?

Lument is one of many companies with an increased focus on DE&I. We are committed to embedding DE&I in all that we do and leveraging our diversity to drive performance.  Further, we are taking a leadership role in the industry through our involvement with the Fannie Mae [Delegated Underwriting and Servicing] DE&I Subcommittee and other activities to bring about change across the industry.

I look forward to the day when DE&I is not talked about as a separate topic, but is so embedded in companies’ culture that it is spoken of in the same vein as business strategy, a well-defined business practice.