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Part 7: Financing More Available

Part 7: Financing More Available

Nearly 73 percent of respondents expect lending activity to increase in the next 12 months. And nearly six out of 10 respondents say capital is more widely available today than it was 12 months ago. Roughly 30 percent say it’s unchanged, and 7.1 percent say it’s less available.

Commercial and multifamily mortgage bankers closed $358.5 billion of loans in 2013 according to the Mortgage Bankers Association’s (MBA) 2013 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation. In terms of property types, multifamily properties saw the highest origination volume with $136.9 billion.

Commercial bank and savings institutions were the leading investor group for whom loans were originated in 2013, responsible for $100.5 billion of the total. CMBS issuers saw the second highest volume, $79.8 billion, and were followed by life insurance companies and pension funds; Fannie Mae; REITS, mortgage REITS and investment funds and Freddie Mac.

“There’s money out there for the right properties,” Ryan says. “Banks have solved a lot of their problems, and insurance companies are lending again.”

Ryan says mortgage debt is more widely available, as is construction financing. “But I wouldn’t say it’s easy to get,” he adds. “They’re not lending to people who don’t know what they’re doing. Lenders are still requiring developers to provide personal guarantees on construction loans.”

Survey respondents are split when it comes to their expectations of loan terms over the next 12 months. While 44 percent expect loan terms to remain unchanged, 46.4 percent expect loan terms to loosen, so it makes sense that respondents are equally split on loan-to-value ratios. Forty-eight percent expect LTV ratios to increase, while 45.6 percent expect them to remain flat. “We’ve seen LTVs increase slightly, but nothing out of the ordinary,” Natwick says. “I think lenders are very disciplined, and that discipline is governing supply and keeping it in check. Lenders continue to look for the three Ss: strong sponsor, great site and an amazing story.”

Next Part 8: Industry Professionals Discuss How Multifamily Real Estate Is Changing

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