May 2017 — Multifamily Properties Quarterly —
Page 9
www.crej.comLending
can help communities, like Denver,
deal with the increasing shortage of
workforce housing. These programs
are aimed at preserving and enhanc-
ing workforce housing by providing
more efficient capital to spur invest-
ment and capital investment into
older multifamily assets. As shown on
the acquisition-financing chart, both
GSEs have been very active in financ-
ing new acquisitions in metro Denver
– accounting for over 75 percent of
new acquisition financing of proper-
ties over 100 units in 2016.
For properties in metro Denver with
units that are affordable at 60 percent
of AMI, both GSEs offer reduced inter-
est rates based on the percentage of
units deemed affordable at 60 percent
of AMI. The rate benefit typically rang-
es from 15 to 30 basis points, depend-
ing on the percentage of units deemed
affordable. For assets that do not have
units affordable at 60 percent of AMI,
but still are considered workforce
housing with rents affordable at 80
percent or even up to 100 percent of
AMI, both GSEs will provide improved
pricing for those assets versus an
asset commanding much higher
rents.
In addition, both GSEs have devel-
oped “green” products that are
designed to incentivize investment
in older assets that generate utility/
energy savings. These programs target
capital improvements that generate
minimum energy savings in the 15 to
20 percent range. Typically, the older
the asset, the easier/less expensive
it is to capture the required energy
savings, making these products great
options for investors and owners of
older multifamily assets. The GSEs
incentivize owners to “go green”
through improved rates and pricing,
typically ranging from 20 to 30 bps.
Finally, both GSEs have developed
value-add products designed to pro-
vide investors and owners of older
multifamily assets short- and long-
term, cost-effective financing options
for moderate and extensive property
upgrades, providing updated housing
and extending the remaining useful
life of the asset. These programs are
competitively priced and designed
either to compete with the more tra-
ditional bridge lenders via short-term
financing or to provide immediate
mid- to long-term financing for assets
that typically would require a bridge
loan during the rehab stage.
While the GSEs continue to focus on
affordable housing and housing for
low-income families, their expanded
product line will help maintain and
increase investment in workforce
housing across the country. Freddie
Mac, for example, is working to devel-
op a mezzanine product as well as a
construction product for workforce
housing that it hopes to launch this
year. For a city like Denver, with an
aging multifamily stock, and strong
population and employment growth,
these products could prove instru-
mental in maintaining and facilitat-
ing additional capital investments
into the older assets – and who
knows, perhaps lead to construction
of new workforce housing.
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Berkeley Point Capital LLC
Berkeley Point Capital LLC