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February 2017 — Multifamily Properties Quarterly — Page 23
TYPE OF CAPITAL SOURCE OF CAPITAL EXPLANATION RATES/SPREADS LTV/COVERAGE TERM AMORTIZATION FOCUS TRENDS
LIFE INSURANCE
COMPANY
• Insurance premiums
• Annuity and GIC sales
• Non-Recourse
• Longer-term fixed
rate loan
175-210 bps over the
comparable US
Treasuries
• Up to 70% LTV
• 1.25x Minimum DCR
5-30
Years
25-30 Years
• Market rate properties in
major metro areas
• B quality properties and above
• Many life insurance companies are ahead of plan for
multifamily allocations and look to become more
selective in 2nd half of 2016
• Most competitive at lower to moderate leverage with
strong sponsor
• Flexible prepayment penalties available for small
pricing premium
• At right leverage (~60%) lenders can do Interest Only
• Best source for terms over 10 years
AGENCY
• Sales of mortgage-
backed securities with
implied government
guaranty
• Non-Recourse
• Longer-term fixed
rate loan
225-250 bps over the
comparable US
Treasuries
• Up to 80% LTV
• 1.20x Minimum DCR
5-30
Years
30 Years
• Market Rate
• Age-Restricted
• Affordable/Workforce
• Major metro areas
• Secondary/Tertiary Markets
• C quality properties and above
• Operating through specially designated underwriters
• Comparable pricing for affordable/workforce housing
• Minimum investment is typically 1MM with no
maximum loan size
• Agencies have increased rates and slowed production
in the face of government mandated caps
CONDUIT (CMBS)
• Sales of mortgage-
backed securities
through public markets
• Non-Recourse
• Longer-term fixed
rate loan
225-275 bps over the
greater of Treasuries
or Swaps
• Up to 75% LTV
• 1.25x Minimum DCR
• 8.0% Minimum Debt Yield
5, 7 & 10
Years
30 Years
• Market Rate
• Second tier properties
• Secondary/Tertiary Markets
• C quality properties and above
• Spreads have narrowed 25-75 bps since 4Q 2015
• Most competitive at higher leverage in secondary and
tertiary markets
• 10 years interest-only under 65% LTV
• 5 years interest-only under 70% LTV
BANK
• Corporate Debt
• Deposits
• Recourse (some non-
recourse available)
• Shorter-term fixed
and floating rate loans
200-300 bps over
bank cost of funds
• Up to 75% LTV for
permanent loans
• Up to 60% of cost for
construction loans
Up to 7
Years
Fixed
Interest Only to
25 Years
• Market Rate
• Age-Restricted
• Affordable/Workforce
• Major metro areas
• Secondary/Tertiary Markets
• B quality properties and above
• Standards are tightening for Sponsors with no deposit
relationship, and establishing a deposit relationship is
becoming a requirement
• Maximum LTC for construction loans has dropped to
55%-60% in last six months
• Most competitive for Sponsors with established banking
relationships and strong borrower history that are willing
to accept recourse
• Primarily recourse loans, with non-recourse available to
strong sponsors at low leverage
• More flexible (open) prepayment terms
DEBT FUND / BRIDGE
LOAN
• Private Capital
• Institutional Capital
• Non-Recourse
• Shorter term bridge
loans for acquisition
and/or repositioning
LIBOR + 300-550 bps
(some w/ floors)
• Up to 85% LTC
• Going-in 1.0x DCR
1 - 5
(3+1+1)
Interest Only
• Market Rate
• Secondary/Tertiary Markets
• C quality properties and above
• Pricing depends on leverage level, property quality, and
Sponsor strength
Multifamily Properties Quarterly - Financing Sources Matrix
JEFF RIGGS
PRESIDENT / PRINCIPAL
(303) 843-0440
C OOPER WILLIAMS
PRINCIPAL
(303) 843-4581
PETER KEEPPER
MANAGING PRINCIPAL
(303) 843-6002
MIKE JEFFRIES
PRINCIPAL
(303) 843-9220
ED BOXER
PRINCIPAL
(303) 843-9256
MICHAEL SALZMAN
VP OF LOAN PRODUCTION
(303) 843-6015
ALEX RIGGS
VP OF LOAN PRODUCTION
(303) 843-4027
Essex Financial Group - Recent Multifamily Transactions
Highland Place Aparments
Denver, CO
$15,000,000 Permanent Loan
CMBS
Belcaro
Colorado Springs, CO
$10,500,000 Permanent Loan
Agency
Keenan Apartment Portfolio
Nashville, TN
$63,581,000 Permanent Loan
Debt Fund