[IMGCAP(1)]NEW YORK CITY-As GlobeSt.com reported last week, the tighter credit conditions have pushed many capital sources out of the market. For multifamily players, however, the go-to lenders of choice have become the government-sponsored entities, Fannie Mae and Freddie Mac. The shift has been so great that intermediaries, and those firms approved to do agency loans, have seen their business in that segment shoot up significantly.For example: the locally-based firm Centerline Holding Co.’s pipeline of agency transactions, so far this year–both closed and in the works–is double that of the beginning few months of last year, reports William T. Hyman, Centerline’s managing director and head of agency lending. And this trend doesn’t only include those borrowers familiar with the agencies. “We are seeing deals flow from borrowers who, for the past several years, stayed away from the agencies, or had never before developed an agency relationship,” says Hyman.Hyman points to a transaction the firm recently completed in Mesa, AZ, where Centerline provided $25.2 million in financing to Tidan/USA for the acquisition of the class A, 308-unit Sun Valley Ranch Apartments through Freddie Mac’s Premier Lease-Up Program.”The borrower financed its entire acquisition pipeline through Wall Street for the past several years. Once that shut down, it quickly started to look for agency alternatives,” Hyman explains. “So we’ve seen new borrowers and we’ve had existing clients, who had begun to use Wall Street over the past few years, come back to the fold.”
Centerline has also seen more significant deals, in terms of sheer numbers, involving agency financing. In the span of a month, the locally-based company closed its largest-ever single Fannie Mae loan, and its second-largest Freddie Mac paper. In the former, the firm provided an $80-million first mortgage to help refinance Citylights at Queens Landing, a 42-story, 522-unit cooperative building in Long Island City, NY. The other loan was for the Vanguard at the Shipyard, a 196-unit community in Hoboken, NJ. The borrower obtained $60 million through Freddie Mac.
Those deals had favorable terms, Centerline reports. In fact, it’s well known that the agencies not only provide significant amounts of capital, they also offer some of the most competitive terms out there. The last deal, in Hoboken, for example, had an interest rate at well below 5%, and the borrower was able to lock in the rate under Freddie Mac’s early rate lock program. So far this year Equity Residential has taken out a $500-million credit facility at a 5.48% rate and AvalonBay Communities signed off on a $265-million paper with an interest rate of just 4.78%.