The Multifamily Affordable Housing team has been busy this Spring and is looking forward to an equally productive Summer.
Last month, we held our first production call dedicated to MAH. The call marked the first of quarterly updates to provide you with the information you need related to production, current business information, and the multifamily affordable market. Thanks to all who joined. The next call is scheduled for August 2021. Stay tuned for more details.
Production Update
It has been a strong year for affordable, with $2.7 billion in affordable business as of the end of March 2021. Thank you!!! That compares to $1.5 billion in the first quarter of last year. We are winning good business together with priority and repeat sponsors. We have strong staffing levels to support current volumes, we are focusing on continuous process improvement, and using technology to create efficiencies, an effort you’ll hear more about in the coming months. Please work with your MAH deal teams to prioritize your deals and keep your pipelines updated.
MTEB Continues to Lead
We have a strong pipeline of transactions that are utilizing the MBS as Tax-Exempt Collateral (MTEB), which provides both the ease of the DUS® execution and the benefits of tax-exempt bonds. And with the MBS Exchange, the same rate lock mechanism that is used for MTEBs in now being used for taxable deals as well.
One of the latest deals to come through was Alta Verde Apartments, a 9% LIHTC forward to finance the construction of an 80-unit property in Breckenridge, Colorado. Taxable bonds were sold, and cash collateralized at initial closing to lock in a low permanent pass-through rate. Fannie Mae provided a forward commitment to issue an MBS once the property stabilizes. Upon conversion, the taxable bonds will be redeemed and exchanged for the Fannie Mae MBS. The 9% LIHTC forward deal was a good fit for the MBS Exchange because of its relatively larger Tier 2, 17-year loan amount of $11.6 million. Alta Verde will provide 80% of its units to residents at 30, 50, or 60% AMI, with the remaining 20% available at 100% AMI. By selling bonds at initial closing, this transaction was able to lock in a much lower rate than a traditional forward commitment can provide and still offset negative arbitrage.
The Fannie Mae MBS is powerful, flexible, and fits a variety of products.
Around the Business: Credit Facilities, RAD, & Recent Wins
As we discussed in the production call, Credit Facilities are an increasingly utilized tool for financing for affordable housing. We have been successful using our structured products as a great fit for financing affordable portfolios - we offer our most flexible finance terms, customization, and adaptability to help borrowers execute their business plans.
Additionally, Rental Assistance Demonstration (RAD) transactions are an important piece of affordable housing preservation that continues to be attractive business, and they don’t have to be huge, groundbreaking deals like the $289 million Manhattan Bundle that we closed with the New York City Housing Development Corporation – we want to see RAD business from across the country.
"RAD deals of pretty much any size, anywhere are a great fit for us.
Brian Wolf, Senior Director, Multifamily Underwriting"
We also continue to win business from strong sponsors in top markets and look for deals with deep affordability and good property conditions. Reach out to your MAH deal team for more information and to discuss your next deal.
Lastly, please join us on May 20th at 3:30 p.m. EDT for a live Business Update in The District, our home for live events, on-demand content, and networking opportunities. Check your inbox for the invite and be sure to add it to your calendar. If you did not receive the invitation or would like us to resend it, please reach out to [email protected].
Thank you for your continued partnership. We’ve done a lot of great work together in challenging circumstances, and we’re looking forward to another strong year.