GlobeSt.com: Who are the "players" when it comes to multifamily lending?

Gerson: The following:

• Government Service Enterprises. The GSEs are most often a program of choice for borrowers if the loan fits GSE parameters. Freddie Mac and Fannie Mae multifamily lending programs are attractive for all-size loans and A, B and C properties in all types of markets. With fixed rates and variable rates—and both over various terms that are, at times, among the lowest in the industry—GSEs account for approximately 30% of all apartment loans in the US.
• Commercial mortgage backed securities/CMBS. With more than 40 CMBS in the marketplace providing funding for multifamily (and other types of commercial property), this group is a major player. The CMBS market has aggressively targeted the multifamily market with 10-year fixed financing and, in some instances, terms that include partially fixed and partially variable interest rates.
• Life-insurance companies. This group has also targeted multifamily lending and is willing to tailor loans to the borrower's desires. Also unique to life-insurance companies is their willingness to provide loan terms of up to 25 years, something that is seldom offered by other lenders.
• Banks. Chase leads the field by far when it comes to banks making multifamily loans. If Chase likes a loan, they will compete hard to win the deal, and from the standpoint of execution, they make a strong case for streamlined, low-cost closings. Other banks, particularly regional banks, provide strong bridge-financing programs for apartments needing to be rehabilitated or turned from low to high occupancy.
• Credit unions. Most loans made by credit unions are less than $10 million, and the ease of execution will vary from credit union to credit union. A unique requirement is that the borrower or its sponsor must be a member of the credit-union lender, but most credit unions have liberal membership requirements.
• Private funds. These funds typically focus on borrowers who cannot get financing for any number of reasons. Private-fund interest rates trend toward the upper end and at times "hard money" rates.

GlobeSt.com: Where do you see the multifamily market and commercial real estate in general heading in 2016 and beyond?

Gerson: At a recent conference were two noted economists who had unrehearsed polar-opposite projections. One predicted the likelihood that we would fall into a recession in 2016. The other heralded that we would not likely see another recession until 2021. These two so-called experts were digesting the same data, and one is a prophet of gloom and doom while the other of boom and more boom. I have yet to talk with a mortgage banker who doesn't think that 2016 will be any less than 2015 in terms of multi-family lending, and most are expecting it to be as strong as well in 2017 and 2018.

Two big factors for commercial real estate are the economy and inflation. A strong economy means that our robust cycle of investment and growth will continue. In an inflationary environment, prices rise and the hot market could slow. From the perspective of most, interest rates aren't going to increase dramatically over the next couple of years, which will help to keep lending volumes high. Even if there are a few more rate hikes by the Federal Reserve over the next year or so, comparatively speaking, rates will stay at a historical low.

All believe that our current recovery has been fragile. During the Clinton administration, the economic recovery took 56 months. We are currently in at least our 75^th month. Though not an economist, my personal opinion is that since this recovery has been so fragile, the number of months is meaningless because of our exceedingly long stretch of fragility.

GlobeSt.com: Any other observations for the coming year?

Gerson:We now live in a world where overnight anything can happen to the economy that could turn the world upside down. The only thing we know for sure is that the US economy appears to be the strongest economy in the world right now. Because of that, there is an excess of capital that is flowing to the US as a safe haven. Real estate is a prime target for the investment and lending of this capital. The downside is the concern that this influx will lead to underwriting standards that we saw from 2005 to 2008.