Lenders Are Fiercely Competitive on Financing Deals

Lender appetite for multifamily deals has not waned. In fact, lenders remain fiercely competitive on multifamily product, and that includes construction financing opportunities, particularly for experienced developers and sponsors. Consumer demand is fueling the market activity along with new loan products, like green financing, for multifamily.

“Lenders continue to be very interested in multifamily projects, as consumer demand and rents remain strong in many markets,” Jennifer Bojorquez, a partner at Troutman Sanders, tells GlobeSt.com. “The appetite for permanent financing on multifamily projects remains strong, and lenders continue to experience a lot of competition for these deals.  The deal flow for construction financing also remains steady, and we’re continuing to see a number of new deals, albeit with experienced multifamily developers.”

Green programs from Fannie and Freddie have also contributed to an increase in lender appetite for multifamily deals. “In recent years, the GSE’s have offered meaningful rate reductions and additional loan proceeds for projects that incorporate renovations for energy efficiency and water conservation,” adds Bojorquez. “I’m seeing a good number of deals with such green renovations. Provided that the green deals hit specified requirements, they do not count toward the agencies’ lending caps.  We’re also seeing a growing number of standard construction deals with affordability components, as a shortage of affordable housing persists and local governments prove to be laser-focused on the issue. Many new deals also include commercial elements, consistent with consumer demand. Lenders are adapting their underwriting to account for these product changes.”