NEWARK-Investors Savings Bank’s Commercial Lending Group has provided a $27 million mortgage refinancing for The Colonnade, a 560-unit multifamily building here, one of three transactions in the Mid-Atlantic to close recently.
The Newark loan, made to the out-of-state entity that owns the Colonnade Apartments, has a cap rate of just under 4.5%, for a five-year deal with a 30-year amortization, Investors Chief Lending Officer Richard Spengler tells GlobeSt.com. The loan appealed because of the building’s proximity to Investors’ Short Hills, NJ, headquarters. “We have four branches in Newark,” Spengler says. “So it was an attraction to have one in our backyard.”
Also appealing was the security roll for the fully rented building, he adds. “This deal was unusually large for the bank this year,” Spengler says. Investors also has provided a $14.5 million adjustable-rate mortgage to refinance two multifamily properties comprising 311 units in Dover, DE, and a $11.9 million adjustable-rate mortgage to refinance three multifamily properties with a total of 190 units in Windsor Mill, MD. “Our average loan amount is lower than last year,” Spengler says. “There are more players in the marketplace.”
In fact, the current environment is a complete reversal of the situation two years ago, during the depths of the downturn. Investors were lending during that period, and found it could get smaller deals done much more easily than large ones. The opposite is now true.
“There is more competition, and the larger deals have more sponsorship,” Spengler says.
Geography plays a role, as well. Competition is moving from east to west, with New York City much more competitive than New Jersey, and New Jersey more so than Pennsylvania, he adds. “Some of the big New York lenders don’t want to come to New Jersey,” Spengler says. “When you move to Pennsylvania, it’s even more pronounced.”
Interest remains particularly strong for multifamily, both for Investors and for lenders overall, he says. And the current stock market turmoil and decline in the value of Treasuries is not affecting the bank’s activity. “The pipeline is healthy,” Spengler reports. “It’s comparable to where it’s been all year long.”
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