Lenders' New Rules Choke Multifamily Deal Flow

DALLAS-With CMBS benched and under harsh review, borrowers can find capital, but the rules have changed in the multifamily market. The well is practically dried up for class B minus and class C assets as are many refinance possibilities for their owners.

The lending chokehold extends to unanchored retail centers, particularly in tertiary cities or struggling inner-urban pockets. “CMBS lenders are sidelined for six months or so. Hopefully, we’ll see life insurance lenders become more active,” Don Farmer, senior vice president of the south central region for Mill Valley, CA-based Bridger Commercial Funding, told developers, bankers and dealmakers at the DFW Apartment and Investment Brokers’ monthly networking meeting at Prestonwood Country Club in North Dallas.

“Is it credit crunch or crisis, depends on who you are. If you are a borrower who needs to refinance, it’s a crisis,” Farmer said. “If you’re a seller, willing to go the agency route, there are some pretty good rates out there. It’s more of a crunch than a crisis for those guys.” He reported that life companies are offering all-in rates of 6.25% to 6.5% and floors hovering 6.25% while commercial banks’ all-in rates range from 6.25% to 7.5%. Agencies’ all-in rates are running from 6.5% to 6.15% and finance companies are ranging from 7.15% to 7.5%.