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November 2016 — Multifamily Properties Quarterly — Page 17
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
COOPER W ILLIAMS
PRINCIPAL
(303) 843-4581
PETER KEEPPER
MANAGING PRINCIPAL
(303) 843-6002
MIKE JEFFRIES
PRINCIPAL
(303) 843-9220
ED BOXER
P RINCIPAL
(303) 843-9256
MICHAEL SALZMAN
VP OF LOAN PRODUCTION
(303) 843-6015
ALEX RIGGS
VP OF LOAN PRODUCTION
(303) 843-4027
This information is intended to illustrate some of the lending options currently available. Other options may exist. While Essex Financial Group strives to present this information as accurately as possible, no guarantee is made
as to the accuracy of the data presented, or the availability of the terms at time of application. Rates and terms are subject to change. Please contact one of our mortgage bankers for up to date rate and term information.
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
Essex Financial Group | 1401 17th Street, Suite 700 | Denver, CO 80202