Trepp Research: Increased Capital Competes for Multifamily Investment, Underwriting Relaxes

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Trepp has published new commercial real estate research on the multifamily sector and how relaxed credit standards have driven competition for investment.

Non-Agency Multifamily CMBS Issuance

Continued investment appetite in multifamily have propelled non-agency CMBS lending and the competition for loans, which has pushed LTVs up and debt yields down.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, published new research on the commercial real estate multifamily property sector. The report cites increased investment in the sector as a result of loosening underwriting standards for multifamily loans.

“Coming out of the recession, multifamily commercial real estate garnered a lot of attention, capital, and development,” said Joe McBride, Research Associate at Trepp. “Caps on GSE lending volume, maturing loans, and continued investment appetite in multifamily have propelled non-agency CMBS lending and the competition for loans, which has pushed LTVs up and debt yields down.”

Due to relaxed credit underwriting practices from traditional lending banks and the reemergence of private capital, non-agency CMBS loan originations have increased. Between 2013 and 2014, CMBS loan origination for multifamily properties doubled, reaching $10.8 billion of volume by the end of 2014. Trepp’s data also reflects increased interest-only loans and a shrinking delinquency rate as drivers of competitive investment in multifamily loans. The multifamily delinquency rate has improved by over 600 basis points since October 2012 and will further strengthen when the Stuyvesant Town loan is paid off in the coming months.

“The multifamily sector has shown generally strong occupancy and financial performance,” added McBride. “Given the large balance of multifamily loans maturing in the next two years, these factors will serve as a pipeline for additional multifamily CMBS issuance growth.”

A complimentary copy of the report can be downloaded at http://www.trepp.com/knowledge/research. For daily CMBS and commercial real estate commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency and investment performance. Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by dmgi, a division of the Daily Mail and General Trust (DMGT).

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Joe McBride
Trepp
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