LOS ANGELES—Fannie Mae and Freddie Mac have long been the go-to sources for multifamily debt capital, and this trend continues. During "A Conversation with Fannie and Freddie," the first of two back-to-back panels on the GSEs at RealShare Apartments Wednesday, moderator Jeffrey Weidell, president of NorthMarq Capital, asked sources from each agency about volume this year.
Phyllis Klein, VP of multifamily customer engagement at Fannie Mae, said the GSE is at $32 billion as of the end of September. “It has been a fabulous year,” she said. “We will have a record year of production. Everybody has benefitted.”
Scott Croul, managing director of production and sales at Freddie Mac, agreed that this year has been a good one and noted that Freddie Mac is now focusing on business going into 2016.
As far as what drives Freddie's pricing is concerned, Croul said it is really the market. “We look at the competitive landscape and how our securities trade among other things,” he said. “That helps us get an idea as to where we should be pricing.”
When asked about volume and managing a pipeline, Klein explained that Fannie has widened pricing in order to tap down volume. “The management of our pipeline has had an ongoing process,” she said. “What we have had to do is look at what our lender has, manage what we have coming into us and manage that pipeline throughout the year.”
Croul notes that Freddie doesn't have a delegated model. “We have a prior approval model that enables us to know what is in the works and what is coming our way.”
As for the multifamily market going forward, both sources are bullish. “We are bullish and it comes all the way from the top of our company…the CEO,” said Klein. “And you can see it in our numbers and in the profits that we have attributed to the organization.” She added that multifamily properties are about 3% of the assets, but contribute over 20% to the bottom line.
Fundamentals, Klein added, are very strong, especially in the coastal markets. Croul too is bullish on the fundamentals of the market, but stressed wage growth as a concern.
“We don't have the wage growth to keep up and that will continue into the foreseeable future," he said. "But we feel multifamily has plenty of legs left.”
Klein added, “Wage growth is still a concern in the ability to raise rents.”
In looking at competition, Klein said “This was the year of the financial institutions and the banks.” The life companies too have been active, she said, as they were last year, although the conduit market is still not as active in multifamily.
The RealShare Apartment two-day event still continues through the rest of today at the Westin Bonaventure in Downtown L.A. and walk-ups are always welcome. See you there. More than 60 high-level speakers and nearly 2000 in attendance at this year's event. The RealShare Conference Series is produced by ALM's Real Estate Media Group, which also publishes Real Estate Forum and GlobeSt.com.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
