Weinert: It is really difficult to finance construction. The only people that can borrow money efficiently is to some degree the people that don't need it, with over regulation in the banking sector part of the cause. The way many investment firms and funds have raised their capital and are designed to scale, they are much more inclined to do larger more mainstream deals, as opposed to smaller middle market ones. In addition, construction costs continue to rapidly escalate especially labor, and it makes structuring a deal all the more difficult and challenging. It gets even harder when you have to marry debt with a junior creditor or a number of equity stakeholders and make sure that they all come together at the right time for a land acquisition or deal closing. So, it continues to be a challenging environment where the vast majority of deals don't make sense without some significant structuring.

GlobeSt.com: You secured financing for projects in California, Louisiana and Texas. Are there any geographic trends in terms of lender interest for deals?

Weinert: All of these markets are in demand. California and parts of Texas might be stronger than Louisiana from a national investment perspective. There is still a lot of demand in general. There are different demand and supply fundamentals, but there are also different laws that lenders need to overcome. These are all Sunbelt growth markets, and so they are all high-demand.

GlobeSt.com: How are you advising borrowers looking for financing in this tight market?

Weinert: We are intimately involved with the sponsors and their selection of projects as well as how they underwrite the projects. We are really careful to encourage our clients to select the deals that are going to attract capital. We'll spend a lot of time underwriting and sourcing acquisitions that are financeable.

GlobeSt.com: Have slowing rental rate growth and lower deal volume this year affected lender interest in multifamily development projects?

Weinert: No, not really. In general, most investors are still open for business and, although there is a lot of supply coming online right now, we are seeing all the supply get absorbed without drops in rental rates. There is also a big housing shortage in Southern California with one of the worst affordability issues in the nation. It could take years before we build enough houses to create affordability for the middle class. There is still a big demand for housing and in general, and there is not enough supply. Rents are still increasing, and some people are giving concessions to get tenants in. On the for-sale housing side, we are seeing home price appreciation continue for most segments of the market, with the exception of the highest end, or the luxury segment.

Multifamily construction financing is notoriously tight, and while large developers can typically secure financing, smaller developers are struggling. Walker & Dunlop's Gabriel Weinert, senior vice president in the capital markets group, recently secured $109 million in construction financing for 11 development projects in California, Louisiana and Texas for middle-market and boutique developers. We sat down with Weinert to talk about securing construction financing for this group of borrowers.

GlobeSt.com: Tell me about these recent multifamily development deals and the trends you are seeing in the market.

Gabriel Weinert: One theme that we are seeing is that some of the boutique or middle-market real estate developers or sponsors are accessing higher leverage debt and structured equity transactions to do residential and multifamily developments in secondary and tertiary locations. Financing for these types of assets has been very constrained, and it is particularly hard to find when you are trying to maximize leverage and limited partner equity and reduce the sponsor's equity. This translates into much more structured debt and equity than in more conventional real estate financings. Another theme on these deals is that it the larger money center banks, such as Bank of America or JP Morgan, weren't interested in some of these deals, so we needed to bring in a regional or community bank or a family office or boutique private equity fund. In addition to that, we needed to bring in mezzanine or preferred equity for the client to accomplish their financing goals.

GlobeSt.com: Are you continuing to see a tight market for construction financing?

Weinert: It is really difficult to finance construction. The only people that can borrow money efficiently is to some degree the people that don't need it, with over regulation in the banking sector part of the cause. The way many investment firms and funds have raised their capital and are designed to scale, they are much more inclined to do larger more mainstream deals, as opposed to smaller middle market ones. In addition, construction costs continue to rapidly escalate especially labor, and it makes structuring a deal all the more difficult and challenging. It gets even harder when you have to marry debt with a junior creditor or a number of equity stakeholders and make sure that they all come together at the right time for a land acquisition or deal closing. So, it continues to be a challenging environment where the vast majority of deals don't make sense without some significant structuring.

GlobeSt.com: You secured financing for projects in California, Louisiana and Texas. Are there any geographic trends in terms of lender interest for deals?

Weinert: All of these markets are in demand. California and parts of Texas might be stronger than Louisiana from a national investment perspective. There is still a lot of demand in general. There are different demand and supply fundamentals, but there are also different laws that lenders need to overcome. These are all Sunbelt growth markets, and so they are all high-demand.

GlobeSt.com: How are you advising borrowers looking for financing in this tight market?

Weinert: We are intimately involved with the sponsors and their selection of projects as well as how they underwrite the projects. We are really careful to encourage our clients to select the deals that are going to attract capital. We'll spend a lot of time underwriting and sourcing acquisitions that are financeable.

GlobeSt.com: Have slowing rental rate growth and lower deal volume this year affected lender interest in multifamily development projects?

Weinert: No, not really. In general, most investors are still open for business and, although there is a lot of supply coming online right now, we are seeing all the supply get absorbed without drops in rental rates. There is also a big housing shortage in Southern California with one of the worst affordability issues in the nation. It could take years before we build enough houses to create affordability for the middle class. There is still a big demand for housing and in general, and there is not enough supply. Rents are still increasing, and some people are giving concessions to get tenants in. On the for-sale housing side, we are seeing home price appreciation continue for most segments of the market, with the exception of the highest end, or the luxury segment.