It’s hard to believe that we’re two-thirds of the way through 2020. It’s been a year of constant challenges, making milestones feel extra important, so we’d like to share what’s on MAH team members’ minds.
At the forefront, of course, is Hurricane Laura. We are monitoring the damage and aftermath it is having on many individuals and communities across the country. Our thoughts are with everyone impacted, and as always, our Disaster Response Network™ is available for renters in need of storm-related assistance.
Read on for some reflections on the MAH business front.
2020 Organizational Changes
Back in January, we announced structural changes across Multifamily with the goal of increasing efficiency and building the skillsets of internal staff:
- The MAH business, led by Angela Kelcher, now reports to Mike Winters, who also oversees the Seniors and Structured Transactions businesses.
- Patrick Murcia and Ray Adkins moved to MAH. Patrick and Ray are now fully engaged with account management and outreach, and they’ll continue to seek feedback from you and your borrowers.
- Credit gained fresh capacity. Brian Wolf and Georgia Hessick now lead two MAH Transaction Management teams and report to Chris Flynn. Including Georgia, MAH Credit brought on a total of seven staff members.
We continue to review our progress against our production goals to capitalize on areas of strength and opportunity – an exercise that drives even better efficiency and service and can help us meet our Mission and Housing Goals.
Production Update
MAH deliveries totaled $3.0 billion in Q2, which compares favorably to $3.1 billion over the same period in 2019. Historically, MAH business is weighted to the second half of the year and indications are the same could hold true for this year.
As a reminder, please update DUS Gateway® with deal information, particularly win/loss decisions – they’re a key indicator of competition and trends in market conditions. The more we know, the better we can meet your business needs
Credit Update
Since the organizational changes in January, we’ve conducted over 30 internal trainings, implemented backup systems to ensure adequate coverage, and held daily credit team calls to prioritize deals and ensure quick problem solving. Additionally, while loan review volume is up by about 33%, turn times have improved overall.
We continue to work closely with lenders to stay calibrated on credit tolerances and submission quality, as those factors greatly facilitate quick responses. As always, we prioritize three areas during reviews:
- Appropriate structures given market dynamics;
- Consistency across deals; and
- Differentiation among transactions, so we can lean in and win the best deals.
We’re watching collections closely considering the uncertainty around COVID-related aid, an issue that can be particularly sensitive at properties without Section 8 subsidies. Please continue to reach out to help us understand your deal and what’s key to winning it.
Deal Spotlight
M.TEB continues to be the preferred execution thanks to its great rate for both tenant in place rehabilitation deals and new construction forwards. Additionally, sponsors often combine the benefits of the M.TEB with the additional discounts that Healthy Housing Rewards™ and Green Rewards have to offer. Check out this M.TEB immediate that closed in July:
Biltmore Towers in Dayton, OH is a 230-unit, age-restricted (55+) multifamily community built in 1929. The property underwent substantial rehabilitation in 2005 when it was redeveloped as an affordable community with 100% units set aside for 45% AMI tenants. Biltmore Towers also includes 37,452 SF of retail space, all situated on a 0.86-acre parcel of land.
Combining the benefits of M.TEB with both Green Rewards and Healthy Housing Rewards Enhanced Resident Services™, this deal with KeyBank includes a moderate rehab supplemental via 4% LIHTC equity and Historic Tax Credit Equity. The new loan will also include a 20-year term renewal of the HAP contract. The total projected rehabilitation of over $20 million will provide $87,000 in upgrades for each unit. To leverage Green Rewards, the borrower incorporated various energy and water efficiency measures projected to save 16% of energy and 30% of water used at the property, including ENERGY STAR appliances, low-flow water fixtures, LED lighting, new central boilers, and new windows. The broader rehab will also include new cabinets, building upgrades that will provide new roofing and siding, and other repairs such as site improvements to exterior lighting and security upgrades. Through Healthy Housing Rewards Enhanced Resident Services, residents will have access to two resident services coordinators who provide onsite programming focused on improving resident stability and health as well as referrals to community services. Residents will also benefit from a partnership with a nearby community health clinic for health and wellness programming.
The M.TEB execution is one of the most competitive out there. Don’t forget that our M.TEB forward rates are comparable to immediate rates without a forward premium. This low rate offsets negative arbitrage and can be combined with the Cost of Issuance reimbursement.
While M.TEB provides one highlight of the MAH products available, we are doing everything we can to make all affordable products the execution of choice for our customers. We are thankful for your partnership. Please reach out to your Deal Team – we look forward to working with you.