Mitch Sinberg, senior managing director in for Berkadia in Florida, sounds off on lending volumes.
MIAMI—Berkadia's South Florida mortgage banking team arranged approximately $225 million in financing for properties across Florida, Arizona, Colorado, Texas, South Carolina and Georgia during the month of September. That's a lot of lending.
Against that backdrop, GlobeSt.com caught up with Mitch Sinberg, senior managing director in for Berkadia in Florida, to get some insights into the market in this exclusive interview. Also be sure to read insights from the firm's new hire, CBRE veteran Charles Foschini, who insists it's a good time to be a borrower.
GlobeSt.com: Berkadia's South Florida team completed over $200 million in financings during the month of September. What's driving the extraordinary volume of loan activity?
Sinberg: First and foremost, we have seen a significant increase in both refinance and acquisition debt requests due to a significant drop in Treasury yields and spread, as a result of general global economic and political volatility. A good example is substantial yield reduction in the weeks following the United Kingdom's Brexit vote. Borrowers are highly motivated to recapitalize or close expeditiously on acquisitions to take advantage of these lower interest rates.
Secondly, as it relates to multifamily, green financing programs have gained momentum. Freddie and Fannie now have programs that incentivize owners to make environmentally conscious retrofits to their properties that reduce water consumption and enhance energy efficiency.
In addition to reducing overall operating expenses, these programs offer owners savings of anywhere from 10 to 30 basis points off their spread. Unless the retrofits have already occurred or the properties are newly developed with high efficiency standards already, we are encouraging our clients to tap into this program while it remains available.
GlobeSt.com: How healthy are the debt markets and what's your outlook for the next 6 to 12 months?
Sinberg: On the construction lending side, banks have gotten far more conservative since the implementation of HVCRE regulations in 2015. Although this certainly is making life challenging for developers, it strengthens the position of owners of existing properties given the reduction in new competitive properties coming online.
Lenders recognize this and there is still a tremendous amount of equity on the sidelines waiting to get placed, without enough supply to satisfy the demand. All of this is very favorable in the permanent capital markets world including Freddie Mac, Fannie Mae, FHA, life companies and CMBS, so I do not see a decline in lending volume or demand in the foreseeable future.
Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.
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