As the market shifts away from depending on the government-sponsored enterprises (GSEs) for multifamily loans, other players are stepping into the space to get a piece of the action.
Borrowers are seeing a new playing field as they search for deals in places other than the GSEs, industry leaders said during a panel discussion Tuesday at the AFT Live conference in Las Vegas.
Banks are stepping in as a leader for short-term loan financing until a borrower can look to other lenders to secure a long-term deal, said R. Lee Harris, president and CEO at Cohen-Esrey Real Estate Services.
“I feel somewhat comfortable probably for the first time in a long time that rates are going to be OK for a reasonable period of time in the next couple of years at least,” he said. “So, I don’t mind doing that bridge.”
Hedge funds are emerging on the horizon as a viable option also for short-term financing, Charles Krawitz said.
Krawitz, a national director at Fifth Third Bank, said hedge funds are making waves in the space looking for loans of less than $5 million.
“There are a couple of lenders out there that plan to do asset-backed deals, and I’ll be curious to see how that plays out as opposed to a traditional CMBS transaction,” he said.
Charles Ostroff, chief underwriter at Arbor Commercial Mortgage, said local banks are putting pressure on to compete for multifamily deals.
“Over time, local banks got into what I would say construction lending, very risky lending, with lots of problems,” he said. “They’ve recently worked out and worked through their problems, and right now they’re looking to put more money on the streets.”
Kristen Croxton, executive vice president of Beech Street Capital, discussed how conduit lenders are keeping competitive with Fannie Mae and Freddie Mac by being more flexible.
“It’s a great place to go if you’ve got something that’s a little bit off that Fannie and Freddie don’t like,” she said.
Another set of lenders giving the GSEs a run for their money are the life companies, the panel said. However, those deals haven’t changed as drastically as CMBS loans over their lifetime, Harris said.
And despite the fact that there are plenty of options in the multifamily loan space, it’s a shared momentum that has enough deals to go around, he said.
“There’s plenty of liquidity in the market,” Harris added.