Strong Residential Rental Market Fueled by Fannie and Freddie
Among the most sought-out asset classes of investments are multi-family rental properties. Two of the most active lenders for this asset class were government-sponsored enterprises Fannie Mae and Freddie Mac, both of whom increased their multi-family lending in 2011 to $44.7 billion, marking double-digit increases.
Fannie Mae provided $24.4 billion of multi-family debt financing in 2011, a 44 percent increase from $16.9 billion in 2010. Freddie Mac financing rose by 32 percent, increasing to $20.3 billion from $15.4 billion.
David Brickman, senior vice president at Freddie Mac, said, “Looking ahead, we expect robust growth in the multi-family market. The outlook is very positive due to solid fundamentals, demographics, low interest rates and strong capital flows into the sector.”
HousingWire reported that refinance represented approximately 48 percent of Freddie’s loan purchase or credit enhancements, with about 35 percent new acquisitions.
About 98 percent of Fannie Mae’s business came from its delegated underwriting and servicing (DUS) platform, which relies on a level of shared risk with lenders. The top lenders last year included Wells Fargo, Walker & Dunlop and Beech Street Capital.
Locally, financial institutions were active lenders for multi-family financing in the region.
New York Community Bank reported that multi-family loans represented $1.6 billion and $5.8 billion, respectively, of loans originated in the current three- and 12-month periods, while commercial real estate loans represented $513.1 million and $2.4 billion, respectively.
At December 31, 2011, multi-family loans represented $17.4 billion, or 68.3 percent, of total loans held for investment, reflecting a $162.1 million increase from the September 30 balance and a $630.8 million increase from the December 31, 2010, balance.
Investors Bancorp reported for the year ended December 31, 2011, it originated $846.7 million in multi-family loans, with total multi-family loans at $1.82 billion. At December 31, 2011, total loans were $8.89 billion and included $5.03 billion in residential loans, $1.82 billion in multi-family loans, $1.42 billion in commercial real estate loans, $277.6 million in construction loans, $242.2 million in consumer and other loans and $106.3 million in commercial and industrial loans.
Signature Bank reported that loans, excluding loans held for sale, expanded $407.2 million, or 6.3 percent, during the 2011 fourth quarter to $6.85 billion, versus $6.44 billion at September 30, 2011. Average loans, excluding loans held for sale, reached $6.65 billion in the 2011 fourth quarter, growing $386.6 million, or 6.2 percent, from the 2011 third quarter, and $1.65 billion, or 32.9 percent, from the fourth quarter of 2010. The increase in loans for the quarter and the year was primarily driven by growth in commercial real estate and multi-family loans underwritten within the bank’s stringent standards.
Dime Community Bancshares reported that real estate loans increased $26.1 million during the most recent quarter. Real estate loan originations were $204 million during the same quarter, at an average rate of 4.22 percent. Loan amortization and satisfactions totaled $164.2 million, or 19 percent of the average portfolio balance on an annualized basis. The average rate on amortized or satisfied loan balances during the most recent quarter was 6.02 percent. The loan pipeline stood at $114.2 million at December 31, 2011, with a weighted average rate of 4.21 percent.
Flushing Financial Corporation reported that “Loan originations increased to $127.9 million for the three months ended December 31, 2011 from $105.9 million for the three months ended September 30, 2011. We continue to see an increase in loan demand as loan applications in process totaled $194.4 million at December 31, 2011. We continue to focus on originating multi-family mortgage loans. During the fourth quarter of 2011, the total originations of multi-family mortgage loans increased $43.7 million to $87.5 million from the comparable prior year period, while the combined total of commercial real estate and construction loan originations was reduced to $0.5 million for the fourth quarter of 2011 from $4.6 million for the comparable prior year period. As a result, total net loans decreased $0.9 million from September 30, 2011 to $3,198.5 million at December 31, 2011.”
Astoria Financial Corp. reported that the combined multi-family/CRE portfolio remained essentially unchanged from September 30, 2011, and totaled $2.3 billion at December 31, 2011, compared to $3.0 billion at December 31, 2010. For the quarter and year ended December 31, 2011, multi-family/CRE loan originations totaled $202.9 million and $204.0 million, respectively. There were no multi-family/CRE loans originated in 2010. Multi-family/CRE loan prepayments for the quarter and year ended December 31, 2011, totaled $182.3 million and $684.8 million, respectively, compared to $112.5 million and $299.0 million for the comparable 2010 periods.