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NEW YORK—Berkadia surveys its mortgage banking and investmentsales experts every year to see what issues are at the top of theirminds. It also does an internal survey of prospective clients,which it doesn't publish. This year's results for the latter weresurprising as the twain definitely did not meet.

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"We asked them the same question as we did our brokers—whatmajor trends impacting multifamily financing are on your radar forthis year—and access to debt, which was among the top concerns forbrokers, was the last thing clients were concerned about," ErnieKatai, executive vice president and head of Production at Berkadia,tells GlobeSt.com.

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Instead, their number one concern was property-level cash flow,he says. "It makes sense of course. When properties are trading atsuch low cap rates owners need to be right about theirassumptions."

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As it happens, Berkadia's 2020 Outlook Powerhouse Poll, whichwill be released this week, identifies several trends that can movethe needle on borrowers' assumptions.

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Concerns about rent control are one example. That can make itvery hard to value a property, Katai says. So far such problemshave remained at bay. "What has happened with the legislation isthat it has allowed for rather large increases, such as around 7%.The fear in the industry is that at some point it could beratcheted down to 1-2%."

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From the perspective of investment sales brokers and mortgagebankers, interest rates and the upcoming presidential election areexpected to have the greatest effect on multifamily investing andfinancing in 2020, with interest rates (86%), the 2020 presidentialelection (44%) and GSE reform (41%) as the top three. For trendsimpacting multifamily investing, investment sales brokers rankedinterest rates (77%), the 2020 presidential election (63%) and debtunderwriting (40%) as the top three factors.

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GSE reform, to state the obvious, has the potential to lead tosignificant changes for multifamily finance. For this year, theagencies have a scorecard to follow, Katai says, but as they getbetter clarity about the path ahead their lending strategies couldchange. "There is a certain cautiousness that comes with that."

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It's not all bad news. Katai also says that the continueduncertainty around GSE reform has "paved a wide, prosperous roadfor institutional investors and other nontraditional lenders toenter the industry."

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Debt funds, for example, are becoming more creative. "Also Ithink we will see more out of life companies, such as morediversity with product offerings like bridge transactions. Everyoneis coming to the table in agreement that they have to be smart andcreative."

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The poll was conducted in December 2019 of over 150 Berkadiainvestment sales brokers and mortgage bankers across 60offices.

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