Barings Multifamily Capital has closed a $10,906,284 refinance loan on Flats on 4^th and a $33,576,000 acquisition loan on The Modern at Providence. Built in 2017, Flats on 4^th is an 86-unit mid-rise apartment complex in downtown Birmingham, Ala. Barings Multifamily Capital refinanced the borrower's construction loan. The loan has a 10-year term with 30-year amortization. The Modern at Providence is a 300-unit garden style apartment property built in 2017 and is located in Huntsville, Ala. The acquisition loan has a 10-year term with 30-year amortization and first five years of interest only.

Walker & Dunlop Provide Bridge Loan to Multifamily Portfolio

Walker & Dunlop provided $93,455,000 in short-term financing through its bridge lending program for the acquisition of a four-property multifamily portfolio located in Westerville and Columbus. Completed on behalf of Oro Capital Advisors, the three-year, nonrecourse loan provides planned capital expenditure funding for property rehabilitation and repositioning. The funding provided by Walker allowed Oro Capital Advisors to acquire the multifamily portfolio on an expedited timeline with flexible prepayment options and at a competitive rate.

Fannie Mae has completed its first multi-tranche Credit Insurance Risk Transfer transaction covering a pool of approximately $10.9 billion of existing multifamily loans in the company’s portfolio. This transaction, CIRT 2018-M02, is the fourth one designed to increase the role of private capital in the multifamily mortgage market.

“We are happy to introduce our first tranched multifamily credit risk sharing transaction, which allowed us to expand reinsurer and insurer participation and realize favorable blended pricing on the tiered risk sharing,” said Jonathan Gross, vice president of multifamily for Fannie Mae. “This new transaction transferred $273 million of risk to nine reinsurers and insurers. This program, aimed at sharing risk with diversified reinsurer and insurer counterparties specifically, supplements our delegated underwriting and servicing program where originating lenders routinely share approximately one-third of the credit risk on our multifamily loans. Our multifamily CIRT program helps us mitigate risk on the other two-thirds of credit risk, benefitting U.S. taxpayers. We plan to return to the market next year with additional multifamily CIRT transactions.”

The covered loan pool for the transaction consists of 1,085 loans, secured by 1,091 multifamily properties, acquired by Fannie Mae from February 2018 through June 2018. Each loan has an unpaid principal balance of $30 million or less.

The transaction became effective Oct.1, 2018, Fannie Mae will retain risk on the first 150 basis points of losses. The A tranche will transfer risk to reinsurers covering the next 150 basis points to 300 basis points of losses. The B tranche will transfer risk to reinsurers covering the next 300 to 400 basis points of losses on the reference pool. Finally, once the pool has experienced 400 basis points of losses, the credit protection will be exhausted, and Fannie Mae will be responsible for any further losses.

Since 2016, in addition to the risk transferred to its DUS lender partners, Fannie Mae has transferred a portion of the credit risk on multifamily mortgages with an aggregate unpaid principal balance of more than $39.5 billion through its CIRT program.

The amount of commercial-multifamily mortgage debt outstanding rose by $45.4 billion, 1.4 percent, in the third quarter of 2018 to an all-time high, according to the Mortgage Bankers Association.
Total commercial-multifamily debt outstanding rose to $3.32 trillion in the third quarter, surpassing the previous high of $3.27 trillion in this year’s second quarter. Multifamily mortgage debt increased $26.1 billion, 2 percent, to $1.3 trillion over the same period.

“Favorable commercial real estate fundamentals and strong lender demand pulled commercial and multifamily mortgage debt outstanding to a new high,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Multifamily mortgage debt continues to lead the pack--accounting for more than half of the total increase--and Fannie Mae, Freddie Mac and FHA remain the key drivers of multifamily mortgage growth. All four of the major lender groups added to the balance of loans they hold.”
The four major investor groups are: bank and thrift; federal agency and government sponsored enterprise portfolios and mortgage backed securities; life insurance companies; and commercial mortgage backed securities, collateralized debt obligation and other asset backed securities issues.

Commercial banks continue to hold the largest share, 40 percent, of commercial-multifamily mortgages at $1.3 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial-multifamily mortgages, 20 percent, at $648 billion. Life insurance companies hold $497 billion, 15 percent and CMBS, CDO and other ABS issues hold $458 billion, 14 percent. Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues.

Multifamily Mortgage Debt Outstanding
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $648 billion, 49 percent; followed by banks and thrifts with $426 billion, 32 percent; state and local governments with $88 billion, 7 percent; life insurance companies with $78 billion, 6 percent; and CMBS, CDO and other ABS issues holding $43 billion, or 3 percent. Nonfarm-noncorporate businesses hold $18 billion, or 1 percent.

Changes in Commercial-Multifamily Mortgage Debt Outstanding
In the third quarter, Agency and GSE portfolios and MBS saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $16.7 billion, or 2.6 percent. Life insurance companies increased their holdings by $11.3 billion, or 2.3 percent; agency and GSE portfolios and MBS increased their holdings by $10.5 billion, or 0.8 percent; and CMBS, CDO and other ABS issues increased their holdings by $5.1 billion, or 1.1 percent.

In percentage terms, REITs saw the largest increase–4.0 percent–in their holdings of commercial/multifamily mortgages. Conversely, state and local government retirement funds saw their holdings decrease 43.9 percent. This figure tends to be more volatile than others.

Changes in Multifamily Mortgage Debt Outstanding
The $26.1 billion increase in multifamily mortgage debt outstanding between the second and third quarter represents a 2.0 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain, $16.7 billion, 2.6 percent, in their holdings of multifamily mortgage debt. Commercial banks increased their holdings by $7.1 billion, or 1.7 percent; and CMBS, CDO and other ABS issues increased by $2.6 billion, or 6.4 percent. State and local government saw the largest decline in their holdings of multifamily mortgage debt, down $2.0 billion, or 2.3 percent. In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages, at 12.7 percent, and state and local government retirement funds saw the biggest decrease at 43.8 percent.

Elion Partners and Buchanan Partners plan to acquire a 164-unit multifamily housing property and an adjacent 3.5-acre land parcel in Montgomery County, Md. The asset and adjacent land parcel were acquired for $34 million, with the total project estimated to cost over $100 million.

The project is located next to the Glenmont Metro Station, which sits on the northeastern terminus of the Washington Metro Red Line. Glenmont is in the burgeoning Montgomery County region, which has recently seen an influx of more professionals seeking a convenient commute to Washington, D.C. As a result, Glenmont currently has a need for enhanced living and lifestyle amenities.

Elion and Buchanan will execute a multi-phase strategy intended to bolster residential quality through renovation of existing apartments while also working to develop the 3.5 acres adjacent to the property. The new development will include 254-multifamily units, with construction expected to begin in the first quarter of 2019.

The project marks the third development partnership between Elion and Buchanan. The joint venture has developed more than $150 million in real estate throughout the U.S. mid-Atlantic region. Together, both firms provide fully integrated hands-on operations throughout all aspects of asset management, from development to accounting.

“We are thrilled to announce another promising transaction with Buchanan, one of the industry’s leading real estate developers in the region,” said Juan DeAngulo, managing partner and co-founder of Elion Partners. “This partnership has already been tremendously rewarding over the years and we look forward to continuing our integrated offering.”

“Our project in Glenmont will allow us to deliver new Class A multifamily inventory in a supply constrained market while improving the existing apartments, enabling us to provide upgraded market-rate housing at affordable rental rates,” said Jimmy Roembke, principal of Buchanan Partners. “We are excited to partner with Elion on this transaction and look forward to our continued investment in Glenmont.”