ORANGE COUNTY, CA—Financing in the multifamily sector is, quite frankly, everywhere in Orange County, Sabal's Pat Jackson tells GlobeSt.com exclusively. In the wake of some recent high-number loans in this market, we spoke with Jackson to get his take on the financing scene here, what lenders are concerned about and which geographical markets are faring best.

GlobeSt.com: Given the rather large multifamily financing deals that have occurred in the Orange County market lately, would you say lenders' underwriting standards for this sector are beginning to loosen?

Jackson: Yes, they have absolutely been loosening, but that's not to suggest that that's a bad thing. Two years ago, everybody was still waiting to see if the signs were going to point in a positive direction, wondering if they can start taking a more realistic underwriting approach to a first mortgage. The pendulum was swinging tightly for a long time, and it was hard to get credit for even A+ deals. Now it's swinging more appropriately to looser underwriting in order to provide good credit options to good properties with good cash flows and the right fundamentals. Certainly in Orange County, all signs would indicate that you should loosen things up; risk is understood better in the Orange County market.

GlobeSt.com: Which geographical areas of the Orange County market have been strongest for this type of financing?

Jackson: It's everywhere, even in areas you didn't even expect to find it. You could almost say any space anywhere in Orange County is doing well. The big dynamic that drives multifamily is that the market has really rebounded in terms of housing. A recent report talked about rent growth in the last quarter being 3.3%. Nobody's getting that annualized rate increase in their salaries unless they had a job change, so rent growth to meet demand is increasing at a higher pace than salary increases. It's driven by an undersupply for people who need a place to live and want to live in Orange County. A lot of it comes from household formations. People are finally able to move out of their parents' house and get their own place or move into Orange County, a seaside county, vs. Riverside. There are a lot of dynamics that help bolster every decent site in Orange County.

That's not to say that a crummy D apartment is going to do well, but people have to live somewhere, and the closer to their job the better. This will have a ripple effect. It's going to drive demand, prices and construction, and we're seeing all of that occur; it drives cap rates. In good locations, cap rates are really low.

GlobeSt.com: What are lenders' biggest concerns about multifamily financing now?

Jackson: What would have them put on the brakes is lots of new construction in a concentrated area to crate supply that would outstrip demand. The fundamentals of the credit for that product could be called into question. You'd better understand not just today's market, but how the market can evolve and affect underwriting standards. That's how the more-sophisticated lender will look at it. There are macroeconomics around a market, plus micro-dynamics. Put that together and you put good risk-adjusted rate decisions around a loan.

GlobeSt.com: What makes your strategy as a financing company unique?

Jackson: A reliable lender is one who really gets it, and that's what we're offering. We're all looking at the same market, but we are a lender who can get the deal done. We have the technology and support to deliver more quickly. Having the confidence about the financing can be an investor's competitive edge to get the deal. In a big, robust market like Orange County multifamily, having someone you can count on to get the loan in order to get the deal done is key.