Multifamily Lending Continues in the Face of Economic Headwinds

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Sep 27, 2022, 18:04 ET

Newmark's New York Multifamily Capital Markets group closes $315.3 million in one month spanning property types and lenders

NEW YORK, Sept. 27, 2022 /PRNewswire/ -- Newmark announces that the firm's New York Multifamily Capital Markets group closed eight transactions totaling $315.3 million in the month of August and has transacted approximately $3.1 billion since the beginning of 2022. Newmark's Multifamily Capital Markets Executive Managing Directors Bill Weber and Henry Stimler, along with Senior Managing Director of Capital Markets Strategies Ari Schwartzbard, worked on behalf of the firm's clients to secure the financings.

"The current interest rate environment has caused many lenders and sellers to reassess their strategies. However, by embracing a creative approach to financing, we were able to instill confidence in our clients spanning a variety of lenders and product types," said Stimler. "We view ourselves as an extension of our clients' ambition and work to help them grow their portfolios, source deals and drive revenue, delivering financing solutions to meet their goals."

The latest transactions to close during August's market volatility covered a broad spectrum of property types and included several types of lenders totaling $315.3 million:

A $115 million partial return of equity provided by Mack Capital for the 300-unit multifamily asset Alas Over Lowry in Denver, CO, which allowed the sponsor to recoup a large portion of their equity in a volatile market.
A $40.5 million refinancing of a bridge loan by Korean lender, KB Kookmin Bank, for a 324-unit multifamily property Laurelwoode in Magnolia, TX, where Newmark connected the client with The Related Companies for $8 million in preferred equity on top of the senior loan. The pairing of a low-cost mortgage with preferred equity capital resulted in a blended cost of capital below market rate deals.
A $29 million origination loan provided by JP Morgan for the 309-unit multifamily property West End in Kansas City, KS for which the sponsor was organized as a Delaware Statuary Trust.
A $32.7 million origination loan provided by Freddie Mac for a 224-unit multifamily property Glen at Cypress Creek in North Lauderdale, FL. Newmark, as a licensed seller servicer, underwrote the agency financing in the transaction.
A $31.1 million loan for the 230-unit student housing portfolio in the Sunbelt by A10 Capital. The team procured strong financing in an asset class that many lenders find challenging in this environment.
A $23.5 million acquisition loan for Crosspoint Apartments in Ohio, where Newmark acted as a delegated lender for Fannie Mae.
A $20 million acquisition loan provided by JP Morgan Asset Management for a multifamily asset, the Palms at Clear Lake in Texas.
A $23.6 million acquisition loan was provided by boutique lender Stifel Bank for Greenhill, an Ohio multifamily property.

"The market has been volatile because of large changes in interest rates over a short period of time," said Weber. "However, with the right mix of lenders and client goals, we were able to secure approximately $3.1 billion in transactions on behalf of our clients since the beginning of the year."

In addition to the August transactional volume, since the beginning of 2022, the New York Multifamily Capital Markets Group has also completed notable transactions including: sourcing a $360 million acquisition loan from lender KKR for the off-market sale of the Dasmen Residential multifamily portfolio to Harbor Group International; securing a $405 million acquisition financing from lender Benefit Street for the off-market multifamily portfolio sale from Cedar Grove Capital to GVA Real Estate Group; a $119 million origination financing from Korean lender KB Kookmin Bank for mixed-use asset Galvin at Twin Brooks; and a $66.7 million acquisition financing of EISAI NJ, a single tenant, triple-net lease office transaction.

According to Newmark Research, investor appetite in multifamily surged in 2Q22 with $86.3 billion in sales volume, representing a 42.4% year-over-year increase and the third largest quarterly sum in history. Total returns through 2Q22 averaged 24.4% on an annualized basis, a 450-basis point increase from 2021. While inflation reached 9.1%, a level not seen in over 30 years, real returns for multifamily rose to 15.3% – significantly outpacing inflation, as has been the case over the past 40+ years, with the exceptions of the early 1990's recession and the Great Recession.

About Newmark
Newmark Group, Inc. (Nasdaq: NMRK), together with its subsidiaries ("Newmark"), is a world leader in commercial real estate, seamlessly powering every phase of the property life cycle. Newmark's comprehensive suite of services and products is uniquely tailored to each client, from owners to occupiers, investors to founders, and startups to blue-chip companies. Combining the platform's global reach with market intelligence in both established and emerging property markets, Newmark provides superior service to clients across the industry spectrum. Newmark generated revenues of nearly $3.2 billion for the twelve months ending June 30, 2022. Newmark's company-owned offices, together with its business partners, operate from approximately 170 offices with over 6,500 professionals around the world. To learn more, visit nmrk.com or follow @newmark.

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