Scott Waynebern
Co-managing member at MF1
MF1, a joint venture of Berkshire Residential and Limekiln Real Estate that lends exclusively on rental housing in the U.S. and mostly in primary markets, closed $2.7 billion of multifamily bridge loans over 39 transactions over the past year, and saw $1.2 billion in payoffs.
Their originations, previously focused on value-add projects, have shifted to around 75 percent lease-up strategies on newly delivered apartments.
“We are originating at a pace that is about double where we were at this time last year,” said Scott Waynebern, who is also president at Limekiln Real Estate. “The broad economy is still great for housing. And the key thesis behind our business is a persistent excess of demand over supply of housing.”
Waynebern said that the focus on rental apartments has largely insulated MF1 from much of the chaos and uncertainty around rising rates and the economic issues currently facing CRE.
“High rates provide some headwinds, but also a lot of tailwinds,” said Waynebern. “Rates create higher coupons, which add some stress to the credit markets, but it’s really good for the underlying cash flows at rental properties because it helps drive the rent-
versus-buy decision when a consumer is choosing their housing options. Also, it’s good for investors and floating-rate debt products because they get higher returns.”
Waynebern gives props to both Eric Draeger, Berkshire’s chief investment officer, and Jon Pfeil, its head of debt portfolio management and investments, for the platform’s successful year.
Transactions of note in 2023 for MF1 included a $165 million bridge loan in Los Angeles, one of the city’s largest last year; loans of $115 million, $127 million and $165 million on newly delivered lease-up plays in South Florida; and a $101 million loan in Nashville. MF1 also provided loans over $100 million in Queens and the Bronx, as well as loans of $83 million and $69 million in Harlem.
Given its origins, MF1, founded in 2018, benefits from the skill sets of its parent firms, including strong roots in real estate credit and the capital markets. The company raises capital via long-term private equity, making it a balance sheet lender that can transact when others are on the sidelines, the company said.
“We use the capital markets to create the liability side of our business,” said Waynebern. “There’s pluses and minuses to every type of structure, but we think this, as a lender, gives us the most runway and the least volatile form of equity capital.”
