WASHINGTON, DC-In the never-ending war between the GSEs and life companies for good multifamily deals, the GSEs are winning--at least this week. The reason, not surprisingly, is the Federal Reserve Bank’s launch of QE3. Over the last two weeks, the GSEs have gotten very competitive over life companies, Walker & Dunlop’s Ted Hermes tells GlobeSt.com.
“Spreads over Treasuries have tightened considerably," he says. "Standard deals are well below 4% -- you can secure them at three-and-a-quarter, fully levered.” Life insurance companies are not as competitive when it comes to proceeds, he adds. “GSEs are winning by offering higher loan-to-values.”
Life companies are still competitive in other respects, he adds. For example, they're still trumping the GSEs with their premiums for forward rate locks. That is an area, in fact, where life companies have traditionally exceled. One example is a deal Walker & Dunlop closed this summer--a $67.5 million refinancing structured for the Huntington Gateway Apartments, a high-rise residential community located in Alexandria, VA. New York Life Insurance Co. won the deal-- over significant interest from the GSEs, Hermes says, providing a 10-year term and a 30-year amortization for the borrower, Huntington Apartment Associates, L.P.
The winning feature, though, was its forward rate lock, he says. It committed to the transaction in the spring and funded it over the summer. Huntington Gateway is a 447,712-square-foot property featuring 443 high-rise units as well as more than 30,000 square feet of retail space.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
