Freddie Mac’s multifamily division set a record with $77.5 billion in loan purchase and guarantee volume for 2018, and $500 million in low-income housing tax credit equity investments. This year’s production beats the previous record of $73.2 billion that was achieved 2017. Overall, the company financed more than 860,000 rental units, more than 90 percent of which are considered affordable to low- and moderate-income families making 120 percent or below of the area median income.

[caption id="attachment_7455" align="alignright" width="300"] Debby Jenkins[/caption]

“In the last decade, we have fundamentally transformed into a company that thrives on innovation,” Debby Jenkins, executive vice president and head of Freddie Mac Multifamily. “We’re working to harness that innovation every day—to create and enhance offerings to meet customer’s diverse needs, to lower our cost of capital and protect taxpayers with innovative securities, and to lead the multifamily industry into its next great chapter.”

In addition to the overall business volume, Freddie Mac served all corners of the multifamily market through its range of offerings, including Small Balance Loans, Targeted Affordable Housing and Green Advantage businesses.

Also, the company securitized a record $72.8 billion through its many securitized deals, transferring a majority of expected and stress credit risk to third-party investors.

Of Freddie Mac's total volume of $77.5 billion, $44.9 billion was not subject to the Federal Housing Finance Agency's volume cap, while $32.6 billion was subject to the volume cap. Uncapped transactions can include certain loans for affordable housing, smaller multifamily properties, seniors housing, manufactured housing communities, and energy- and water-saving improvements.

“As we look forward, we’re going to continue working to address the persistent affordability challenges facing countless renters,” said Jenkins. “In fact, far too many Americans are struggling to find suitable housing at a reasonable price, and we are continuing our work toward innovations that can help."

Freddie Mac Multifamily 2018 Highlights

In addition to the record $78 billion in total production, the company reached the following milestones:

• A record $8.1 billion in Targeted Affordable Housing Loans.
• More than $8.3 billion in Small Balance Loans, up from $7.8 billion in 2017
• Almost $23.1 billion in Green Advantage loans for energy- and water-saving improvements to workforce housing.
• LIHTC Equity Investments totaling $500 million—Freddie Mac’s first LIHTC equity investments since 2008.

Additional highlights include:

• $4.1 billion in Seniors Housing Loans, including apartments for seniors.
• $2.5 billion in Student Housing Loans
• $1.8 billion in manufactured housing community loans

More than 90 percent of the eligible rental units Freddie has funded are affordable to families with low-to-moderate incomes making 120 percent or less of the area median income.

 

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Middleburg, a development and management firm, completed its initial closing on Workforce Housing Fund and will contribute a previously acquired property, Vesta Derby Oaks to the fund.

The firm will continue to raise capital and add other family office and high net worth investors to the fund, which is expandable to $75 million, giving Middleburg the capacity to invest in around $250 million of real estate.

The fund's strategy is to acquire and substantially rehabilitate physically or operationally distressed assets (major deferred maintenance, poor management, high vacancy etc.) of existing multifamily workforce housing in the Southeastern and Mid-Atlantic regions of the U.S. After renovations, the fund will own modern, updated communities at a basis significantly below replacement cost, allowing Middleburg to rent high-quality apartment homes at levels affordable to working families.

The fund's first acquisition is a $30 million renovation of Vesta Derby, which was 15 percent occupied at the time of purchase. Many of the buildings were abandoned, creating significant blight and crime risk for the neighborhood. In addition to introducing professional management and improved security,

"The lack of supply of quality rental housing affordable to working families and individuals has reached crisis levels. Our investments through the Fund not only provide high quality rental housing, but achieve strong returns for our partners, who appreciate the social impact of community building," said Chris Finlay, Middleburg’s Managing Partner. "Vesta Derby is a great template for how we can create real transformational impact in the community, with far-reaching benefits."

Middleburg has received construction financing from Key Bank for Vesta Derby.

 

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Fannie Mae has priced its first Multifamily DUS REMIC in 2019 totaling $996.5 million under its Fannie Mae Guaranteed Multifamily Structures, also known as Fannie Mae Gems, and its latest green offering.

"This marks Fannie Mae's ninth Green GeMS deal; the desk continues to bring alternative Green investments to the Green MBS market, while providing the same solid credit performance to our established DUS and GeMS investors,” said Dan Dresser, vice president, for multifamily capital markets, trading and credit pricing for Fannie.

Fannie Mae's multifamily green financing business provides financing through several different Green product offerings, encouraging apartment building owners to make energy and water savings improvements to their properties.

In addition, the Fannie Mae Green Financing Business provides financing to properties holding a third-party, Fannie Mae approved green building certification. Fannie Mae introduced the Green MBS product to the market in 2012 and has issued over $51 billion in Green MBS since the program’s inception.

"Because the [deal] is fully collateralized by our Green Rewards MBS, the deal supports the reduction of greenhouse gases, as well as the reduction of utility costs for families and individual tenants through retrofits to existing, aging Multifamily housing in the United States,” said Chrissa Pagitsas, director of multifamily green financing business at Fannie.

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