The multifamily market has so far had a solid 2018, with rent growth of 3.1 percent.

Demand continues to be the main driver. Household formation is running at roughly 1.5 million per year, helping fill the 300,000 multifamily units of new supply, according to the Multifamily National Report for November 2018 from Yardi Matrix. Occupancy rates of stable properties have remained above 95.0% for over two years. Robust job growth and a long-term population shift have propelled warm-weather and West Coast metros.

Las Vegas (7.4% year-over-year) and Phoenix (6.6%) have the highest rent growth, while Atlanta (5.4%), Orlando (5.2%) and Tampa (3.9%) are all among the top metros.

Despite the brush with rent control (which failed to win a referendum in the November election) and increasing problem with affordability, rents continue to march upward in California. The Inland Empire (5.4%), San Jose (5.0%), Los Angeles (4.2%), San Francisco (4.0%) and Sacramento (3.8%) are all among the top 10 metros in rent growth.

Job growth ranges between moderate and robust in those metros, but the big issue in most of the state is supply; California desperately needs new stock to house the number of people that want to live there. The five California metros in the top 10 for rent growth all are among the bottom seven in deliveries as a percentage of stock. Sacramento and the Inland Empire are growing at less than 1% per year, while San Francisco, San Jose and Los Angeles are adding less than 1.5% to stock per year.

The metros with the highest supply pipelines are maintaining occupancy rates and moderate rent growth. That includes Nashville (6.5% supply growth, 2.6% rent growth), Austin (5.0%, 3.5%), Denver (4.9%, 2.8%) and Miami (4.2%, 3.4%). On the flip side, Houston’s rent growth lags at 1.3% despite healthy job creation numbers.

Hunt Real Estate Capital has provided three Freddie Mac Small Balance Loans totaling $11.1 million. To complete the transactions, Hunt provided two cash-out refinances, which provided liquidity for the acquisition of a third property.

The loans have a five-year fixed-rate term, with no interest only period, amortized over 30-years. All three properties are fully occupied, and they are as follows:

• Springtree Apartments received a $6.7 million loan to acquire Springtree Apartments in Lakewood, Wash. The complex is comprised of 13 buildings and the unit mix includes 14 one-bedroom, one-bathroom units and 89 two-bedroom, one-bathroom apartments. The sellers recently completed a property renovation. There are 41 surface parking spots at the property, and project amenities includes common laundry, a sport court, playground, barbecue/picnic area, and on-site manager.
• Southcrest Apartments received a loan in the amount of $1.7 million to refinance the Lakewood, Wash-based property. Built in 1970, the property consists of five, two-story apartment buildings. The unit mix is 35 one-bedroom, one-bathroom units, and one two-bedroom, one-bathroom apartment. There are also 46 surface parking spots at the property. Units have been updated when turned over during the past three years, with the owner investing $119,520 in improvements since acquisition.
• Colonial Village Apartments received a $2.7 million loan to refinance the property that’s based in Tacoma, Wash. The property was built in 1961 and the borrowers have maintained the property replacing, repairing and upgrading as needed. They have invested $160,640 in the property since acquisition. The property has 25 one-bedroom, one-bathroom units, and 16 two-bedroom, one-bathroom apartments.

"The borrowers have solid experience in the local rental market with a proven track record for success," noted Chris Warren, director at Hunt Real Estate Capital. "They purchased their first multifamily complex in 1988 and have steadily expanded their portfolio since. The borrowers have successfully owned and operated multifamily properties in the greater Seattle area for over 31 years. "

Freddie Mac and Boston Financial Investment Management have completed an affordable housing investment. The $5.5 million low-income housing tax credit fund equity investment is for the rehabilitation of Riverwood Village Apartments, a Section 8 family property in Russellville, Ark. The complex consists of 72 units within eight, two-story walk-ups originally built in 1976.

“The preservation and rehabilitation of Riverwood Village will have a tremendous positive impact on the families that live there as well as the surrounding community of Russellville,” said Sarah Laubinger, executive vice president of Boston Financial. “We look forward to working together to further our shared mission of bringing safe, quality and affordable housing to communities across the country.”

The investment was made through a LIHTC that Freddie has closed with Boston Financial, the third closing since re-entering the market in September. The $100 million fund  is the first managed by Boston Financial. The LIHTC program finances affordable rental housing in the U.S.

The fund will focus on transactions in areas that have been underserved over the past decade, such as rural communities, four percent LIHTC financing and developments that provide intensive supportive services  for their residents.

Among planned improvements to the apartment are exterior and interior renovations, including energy efficient windows, HVAC system upgrades, energy efficient lighting, new flooring, and kitchen and bathroom replacements. Several community amenities will be upgraded or added as well, including a new playground, community rooms, a fitness center, a business center, and library and laundry rooms. Six of the units will be made handicap accessible.

“The first investment through the fund will provide for a full renovation of Riverwood Village,” said David Leopold, vice president of targeted affordable sales and investments at Freddie Mac. “The 72 affordable housing units were built more than 40 years ago and are in serious need of rehabilitation.”

Hunt Real Estate Capital has provided conventional Fannie Mae multifamily loans in the amount of $35.2 million in a cash-out refinance of a four-property multifamily portfolio located in Reading, Pennsylvania.

The loans have a 12-year term, 11.5-year yield maintenance and 30-year amortization. All of the loans carried Green Rewards pricing provided through planned water conservation upgrades.

They are backed by a local sponsor and management company, whose real estate portfolio consists of 2,000 multifamily units in 15 multifamily properties. Hunt Real Estate Capital financed Reed Farm just last year, which was the sponsor's first Fannie Mae DUS loan.

James Conley of HFF in Philadelphia represented the sponsor.

"These loans were rate locked at application in early August under the Fannie Mae Streamlined Rate Lock Program.  The sponsor was extremely rate sensitive and to achieve his target we needed to close in just 45 days," noted Bryan Cullen, managing director at Hunt Real Estate Capital.

The properties include the following:

• A 161-unit multifamily community built in 1960 that enjoys good visibility and access to the major interstate highways in Reading. Hunt Real Estate Capital provided a loan for $10.7 million to refinance this property. In addition to the green repairs, the borrower plans on roof, drainage and asphalt repairs. Property amenities include private off-street parking and a laundry facility.
• A $10 million loan to refinance a 97-unit apartment complex built in 1969 with very good visibility and access to the major interstate highways.Since 2016, the borrower implemented a variety of internal and external improvements.  Green upgrades and asphalt parking areas will be repaired as part of the refinance.
• A 77-unit garden-style apartment complex built in 1968, which Hunt refinanced with a $4.6 million loan.  In addition to water savings measures, there will be boiler replacement and asphalt work. The community features private off-street parking and a laundry facility, and this property is in good condition and offers good visibility.
• A $9.9 million loan to secure a 156-unit garden-style apartment complex built in 1950. Along with the water-saving upgrades, the sponsor will be spending another $100,000 on exterior needs. The property has good visibility and access to the major interstate highways and offers residents private off-street parking, a playground, and a laundry facility. The borrower recently completed a number of property improvements.