Multifamily loans continue in the face of economic headwinds
Closure of Newmark’s New York Multifamily Capital Markets group $315.3 million in one month covering property types and lenders
NEW YORK, September 27, 2022 /PRNewswire/ — Newmark announces that the firm’s New York Multifamily Capital Markets group has completed eight transactions totaling $315.3 million in the month of August and made approximately $3.1 billion since the start of 2022. Executive Managing Directors of Newmark Multi-Family Capital Markets Bill Weber and Henry Stimleralongside the Senior Managing Director of Capital Markets Strategies Ari Schwartzbardworked on behalf of the firm’s clients to secure financing.
“The current interest rate environment has caused many lenders and sellers to re-evaluate their strategies. However, by taking a creative approach to funding, we have been able to instill confidence in our clients spanning a variety of lenders and product types” , said Stimler. “We see ourselves as an extension of our clients’ ambition and work to help them grow their portfolios, find deals and generate revenue, providing them with financing solutions to achieve their goals.”
The latest deals completed during the market volatility in August covered a wide range of property types and included multiple types of lenders totaling $315.3 million:
- A $115 million partial equity repayment provided by Mack Capital for the 300-unit multifamily asset Alas Over Lowry in Denver, COwhich allowed the sponsor to recover a large part of its equity in a volatile market.
- A $40.5 million refinancing of a bridge loan by Korean lender, KB Kookmin Bank, for a 324-unit Laurelwoode multifamily property in Magnolia, Texaswhere Newmark put the client in touch with The Related Companies for $8 million in preferred shares in addition to the senior loan. Pairing a low-cost mortgage with preferred equity resulted in a blended cost of capital below market rates.
- A $29 million origination loan provided by JP Morgan for the 309-unit West End multifamily property in Kansas City, KS for which the sponsor was organized as Delaware Statuary Trust.
- A $32.7 million origination loan provided by Freddie Mac for a 224-unit Glen multifamily property at Cypress Creek in North Lauderdale, Florida. Newmark, as an approved seller, underwrote agency financing in the transaction.
- A $31.1 million loan for the portfolio of 230 student accommodation in the Sunbelt by A10 Capital. The team secured strong funding in an asset class that many lenders are finding difficult in this environment.
- A $23.5 million acquisition loan for Crosspoint Apartments in Ohiowhere Newmark acted as sub-lender for Fannie Mae.
- A $20 million acquisition loan granted by JP Morgan Asset Management for a multi-family asset, the Palms at Clear Lake in Texas.
- A $23.6 million acquisition loan was provided by boutique lender Stifel Bank for Greenhill, a Ohio multi-family property.
“The market has been volatile due to large swings in interest rates over a short period of time,” Weber said. “However, with the right mix of lenders and client targets, 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 August’s transaction volume, since the start of 2022, the New York Multifamily Capital Markets Group has also completed notable transactions, including: the provisioning of a $360 million acquisition loan from lender KKR for the off-market sale of the Dasmen Residential multi-family portfolio to Harbor Group International; securing a $405 million acquisition financing of lender Benefit Street for the off-market sale of Cedar Grove Capital’s multi-family portfolio to GVA Real Estate Group; a $119 million origination financing from Korean lender KB Kookmin Bank for the Galvin mixed-use asset in Twin Brooks; and one $66.7 million financing of the acquisition of EISAI NJ, a single tenant, triple net lease office transaction.
According to Newmark Research, investor appetite for 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, an increase of 450 basis points from 2021. While inflation hit 9.1%, a level not seen since over 30 years, real returns for multi-family dwellings have reached 15.3%, significantly outpacing inflation, as has been the case for the past 40+ years, with the exception of the recession of the early 1990s and the Great Recession.
Newmark Group, Inc. (Nasdaq: NMRK), together with its subsidiaries (“Newmark”), is a global leader in commercial real estate, seamlessly powering every phase of the property lifecycle. Newmark’s full range of services and products are uniquely tailored to each client, from owners to occupiers, investors to founders, and startups to blue chip enterprises. Combining the platform’s global reach with market intelligence in established and emerging real estate markets, Newmark delivers superior service to clients across all industries. Newmark has generated revenue from nearly $3.2 billion for the twelve months ending June 30, 2022. Newmark company-owned offices, together with its business partners, operate from approximately 170 offices with over 6,500 professionals worldwide. To learn more, visit nmrk.com or follow @newmark.
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