Among the most notable are small loan products for apartments. Firms such as Chicago-based Aries Capital, through subsidiary Aries Multifamily; Alliant Capital in Anaheim, CA; and New York City-based Centerline Capital, through its agency lending group, have all launched small lending programs over the past year. The debt typically is up to $5 million, and is sometimes obtained through the agencies' small lending products.
Recently, Prudential Mortgage Capital Co. unveiled a new program that attempts to meet another need in the market: debt for unstabilized properties. Dubbed the Agency Gateway program, it caters to apartment owners who need to refinance or buy assets that currently don't qualify for Fannie Mae or Freddie Mac financing. Those include well-located, completed or renovated properties that have not yet reached stabilized occupancy levels.
Ted Hopkins, a PMCC principal and portfolio manager of Agency Gateway, says the locally based company launched the program because they saw a need in the market and an opportunity to capitalize off the upside. "The improving economy and upward growth in employment are positives for multifamily properties," he states. "We feel it's time to get in there and help multifamily properties get stabilized."
Ranging in size from $5 million to $25 million, the loans will run for terms of six to 24 months. Once the property is stabilized, an agency exit is likely, says Hopkins. Though he will not disclose the specifics of the financing in terms of rates or LTV, he says the deals are considered on a case-by-case basis and the pricing is "very competitive. That is one factor that we rely on, plus the fact that we know multifamily product very well. Each loan is tailored to the individual property."
Despite the competition from capital sources that have reappeared or made new entrances into the market, Hopkins is confident the program will be successful. "With the improving economy, we will see more people coming back to multifamily lending," he says. "There is strong demand for this product due to the economic situation and the current slowdown. We have intentions of keeping this product available for the near term and longer, if need be."
Prudential Mortgage Capital, the commercial mortgage lending business of Prudential Financial Inc., has provided more than $16.4 billion in multifamily debt over the past five years, originating more than $2.4 billion in 2009 alone. The firm is both a Fannie Mae DUS lender and a Freddie Mac Program Plus lender.
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