July 1, 2020
Amid an economic slowdown like no other in recent memory, resulting from the mandate to shut down much of the economy to help contain the spread of COVID-19, the response among investors and lenders alike hasn’t been business as usual. A panel of experts assembled by Berkadia shared insights into the current, ever-evolving landscape.
The recovery is shaping up to be “idiosyncratic,” said Greg Michaud, managing director, head of real estate finance of Voya Investment Group. “You’re going to have to pick your spots on where relative value is, and go to the markets where you want to be.”
Similarly, Rex Rudy, national manager of commercial real estate at U.S. Bank, said certain property types were in favor from a borrowing and lending standpoint at present, while others were largely on the sidelines. Multifamily and industrial continue to draw strong interest, although the same can’t be said for the two sectors hit the hardest by the shutdown: lodging and retail.
However, in contrast to the pause the market took as stay-at-home orders were implemented beginning in mid-March, deals are getting done today. Ernie Katai, EVP and head of production at Berkadia, noted that while his company’s book of business at the outset of the shutdown was strictly refinancing transactions, now it’s about 30% acquisition loans.
“That market is coming back to life,” said Katai. In fact, Berkadia’s current HUD pipeline overall is up compared to a year ago.
That being said, Lamar Seats, deputy assistant secretary for multifamily housing programs at HUD, noted that the refi business has increased considerably on a year-over-year basis. Overall, since his group shifted to working remotely this past spring, “We’re close to closing 225 loans, which I think is a great success story.”
Debby Jenkins, EVP and head of multifamily business at Freddie Mac, and Fannie Mae’s Robert Levin, SVP for multifamily customer engagement, provided insights from the standpoint of the GSEs, which have been going full tilt in the current environment.
Levin’s colleague Kim Betancourt, a director in Fannie Mae’s Economic & Strategic Research group, preceded the panel discussion with a high-level view of the multifamily housing market and the broader U.S. economy. When it comes to the outlook for the economy Betancourt noted that there were many unknowns. “We’ve never had this in the past,” she said.
Berkadia CEO Justin Wheeler moderated the discussion. Replays of Berkadia’s June 18 Lender Roundtable Webinar are available by clicking here.
For comments, questions or concerns, please contact Paul Bubny