Continued strong performance in the multifamily market will result in another record year, according to Freddie Mac Multifamily 2019 Outlook. That’s because rent growth and vacancies will again outperform historical averages, even as new supply remains elevated into 2020, because originations are expected to continue to rise.

“Even with continued growth in supply, we expect vacancy rates to remain below historical averages in 2019, and we see rent growth reaching 4 percent,” said Steve Guggenmos, vice president of multifamily research and modeling for Freddie Mac. “Along with demographic trends and the shift in consumer preferences toward urban areas, we examine the comparatively high cost of homeownership by market and that is another important factor that will continue to drive healthy performance in the multifamily market.”

Among other key takeaways are the following:

• The multifamily market enters 2019 strong, with solid rent growth and only modest increases in vacancy rates despite an elevated level of new supply.
• Rents and vacancies will continue outperforming historical averages through 2019. Even as new supply remains elevated into 2020, robust demand related to changing demographics and consumer preferences continues to push rents up and vacancies down.
• Rents will vary across markets, with rents above historic averages projected for Colorado Springs, Charlotte, Fort Worth and Denver. Meanwhile, New York City, Washington, D.C., Riverside, Norfolk and Orange County will all see rents below historic averages. Even in areas with slowing rents, most metros will see rent growth surpass the target inflation rate of 2 percent.
• Cap rates will begin to increase with the rise in Treasury rates. Cap rates typically lag Treasury rates. Although they remained low and even fell slightly in 2018, the outlook projects rising cap rates in 2019 if Treasury rates move above 2018 highs.

Multifamily origination volume is projected to grow to $317 billion in 2019, driven by solid market fundamentals and strong investor demand for multifamily properties. The 2019 figure will exceed the $305 billion in originations estimated for 2018.

Acres Capital Corp. closed around $500 million in transactions in 2018, according to the company.

“In a highly competitive lending environment, we managed to grow our origination volume and cultivate new borrower relationships—all without sacrificing our rigorous underwriting criteria,” said Mark Fogel, CEO and president of Acres. “The significant progress achieved in 2018 is a testament to the competitive advantages of our unique debt platform and advances our mission of becoming the nation’s premier commercial real estate middle-market lender.” a leading commercial real estate middle-market lender

Acres’ customized bridge loans are available to sponsors and are secured by a geographically diverse collection of multifamily properties.

Among the deals the firm completed last year are the following:

• $30.5 million first mortgage loan to finance the acquisition and conversion of an existing residential rental building to an upscale, full-service, boutique hotel located in the historic district of Los Angeles.
• $45.0 million first mortgage loan to finance the redevelopment of a 93-unit residential condominium community in Fremont, Calif.
• $35.3 million first mortgage loan to finance the development of a Class A, 194-unit, 592-bed, student-oriented townhome and mid-rise apartment complex near University of Louisiana at Lafayette.

Also, Acres recruited some industry veterans to the firm: Jonathan Gilfillan joined Acres as a senior vice president, focused on alternative lending. He joined from Huntington Bank, where he grew the portfolio of commercial real estate loans to $500 million under assets, from than less $100 million, over three years. Peter Hills has sign on to handle originations and sponsor relations in the Atlantic region. Prior to joining Acres, Mr. Hills contributed to the development and management of finance platforms in the Americas, Europe and Asia for Morgan Stanley, JPMorgan Chase and Credit Suisse.

Churchill Stateside Group LLC, a real estate company, has closed on Springwood at Allen, a 92-unit new construction property that’s located in Allen, Texas.

CSG through its subsidiary Churchill Mortgage Investment provided a $12,894,500 insured loan under Department of Housing and Urban Development guidelines for the construction of multifamily properties. The Springwood is a single story/ranch style apartment property for seniors 62+ years of age. Construction began in December.

CSG offers more than 25 years of construction lending and loan administration capabilities which exceed $1.5 billion in all 50 states. “Our goal is to deliver outstanding service along with competitive rates, terms and loan proceeds,” said Keith Gloeckl, CEO of CSG. “We are especially proud of our quick turnaround times in processing construction draws for properties such as Springwood at Allen.”

CSG’s experienced team ensures that all aspects of the construction lending programs are effectively managed from application to servicing to meet the needs of clients for conventional and affordable multifamily housing loans.

“The depth of experience in our HUD underwriting team allowed us to meet the developer’s objectives of maximum loan proceeds and an early interest rate lock in a rising rate environment,” said Daniel Duda, vice president and national associate director of originations and acquisitions at CSG.