The commercial lending sector, which for the first time saw multifamily debt outstanding exceed $3 trillion, added a new apartment rehab program and enabled the largest private student housing transaction on record. Fannie Mae and Freddie Mac continue to play a significant role in commercial mortgage activity.
But first, Love Funding Corp. funded a $3.96 million refinance loan for a 101-unit multifamily and senior housing complex in Martinsville, Ind. The HUD-insured loan has a 35-year amortization term with an interest rate of 6 percent, providing savings of more than $41,065 per annum in debt service over the original loan, which had a rate of 8.5 percent.
ARCS Commercial Mortgage Co. arranged $6.8 million in financing for a 123-unit property in Madera, Calif. The loan for the 23-building apartment complex was for a 10-year term/30-year amortization and will be interest only for the first five years at a rate of 5.89 percent, the Calabasas Hills, Calif.-based multifamily lender announced.
On behalf of its conduit account, Prudential Mortgage Capital Co. originated a $100 million loan secured by a portfolio of nine contiguous industrial buildings, totaling 2.1 million square feet in Commerce, Calif. The borrower, Lion Industrial Trust, agreed to a 10-year term with a fixed rate, the commercial mortgage arm of New Jersey-based Prudential Financial reported.
Deutsche Bank Berkshire Mortgage, in conjunction with Freddie, provided $153 million in financing and a $30.5 million bridge loan that enabled Campus Apartments Inc. to acquire a 14-property student housing portfolio for a purchase price of $256 million, a news release stated. The rest of the funds for the portfolio -- which spans six states and represents the largest private student housing transaction on record -- were provided through Campus' $1.1 billion joint venture with GIC Real Estate Pte Ltd.
"Freddie Mac views the student housing segment of the market to be an attractive expansion opportunity," the secondary lender was quoted as saying in the announcement.
Deutsche Bank Berkshire also recently provided a $465-million financing package for the acquisition and development of a mixed-use apartment project in Hollywood, Calif., according to another announcement. The 400-square-foot project will feature 375 luxury studios and one-and two-bedroom units, of which 78 will be affordable housing units. The financing consists of a $180-million Fannie new construction forward credit enhancement, a $135-million senior secured construction facility, and a $150-million facility backed by capital commitments and not secured by the real estate.
Those seeking funds for renovating multifamily properties can now turn to Community Investment Mezzanine Fund LP, a partnership between Fannie and RCG Longview. The partnership offers an enhanced Community Investments Mezzanine-Moderate Rehabilitation product for one-stop financing on a combination of Desktop Underwriting System loans and mezzanine loans for multifamily properties with rehabilitation needs that cost $5,000 or more per unit.
The mezzanine loan provides $500,000 to $50 million for single assets and up to $150 million for multiple asset portfolios, and is secured by a pledge of the mezzanine borrowing entity's ownership interest in the borrower. The product works in lock-step with Fannie's DUS Supplemental Loan program which can be used to pay off the mezzanine debt. The mezzanine loan starts with a prepayment premium schedule of 2 percent but after the one-year lockout period declines by one-half percent per year. CI Mezz-Mod Rehab also offers an amortization schedule of up to 30 years, with interest-only options available, according to the announcement.
The rehab program may contribute to future growth of multifamily mortgage debt outstanding, which in the first three months of the year grew by 2.5 percent to exceed $3 trillion for the first time, the Mortgage Bankers Association said its analysis of the Federal Reserve Board Flow of Funds data showed. Of the $3.001 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve, over $0.7 trillion was multifamily.
Issuers of commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities were responsible for almost 60 percent of the $72.4 billion quarterly growth in overall debt outstanding, while they contributed almost 70 percent of the $11.8 billion growth in the multifamily market, MBA noted.
Commercial banks reportedly continued to hold the largest share -- 43 percent or $1.3 trillion of the total -- of commercial/multifamily mortgages, and the second largest share -- 22 percent or $661 billion -- was held by CMBS, CDO and other ABS issuers. Life insurance companies hold 9 percent of the total, savings institutions 7 percent, and government-sponsored enterprises and federally related mortgage pools another 7 percent.
However, the GSEs and Ginnie Mae hold the largest share -- 30 percent -- of the total multifamily debt outstanding, followed by commercial banks' 22 percent, MBA said.