Berkadia Commercial Mortgage LLC, the joint venture of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) and Leucadia National Corp. (LUK), is looking beyond apartments as the U.S. government scales back in the market.
The commercial mortgage originator and servicer plans to expand its financing of offices, retail properties and hotels, said Hugh Frater, Berkadia’s chief executive officer. The bulk of the Horsham, Pennsylvania-based company’s business is currently tied to originating apartment loans backed by Fannie Mae, Freddie Mac and the Federal Housing Administration.
“Our intention is to diversify,” Frater, 57, said in an interview yesterday. “Diversify by property type, do a bit more in the other food groups, and then also diversify our lender mix.”
Berkadia, the third-largest U.S. commercial and multifamily mortgage servicer, is preparing for changes at government-backed Fannie Mae and Freddie Mac that may push up funding costs for apartment loans. It’s also seeking to profit from a rebound in offices, retail and other types of commercial properties in regions such as Texas and California, and is adding mortgage bankers and sales advisers in states including Florida and Georgia.
“A recovering commercial real estate market, which in turn means more transactions, is good news for them,” said Ben Carlos Thypin, director of market analysis at New York-based Real Capital Analytics Inc.
Read More: http://www.bloomberg.com/news/2013-05-02/berkadia-looks-beyond-apartments-as-u-s-retreating.html
Will the industry’s momentum build to a point where conduits are again giving the GSEs a run for their money?
“I’m not even sure if that’s the right way to look at it, because the rates being offered by the GSEs right now are so good,” says Ben Thypin, a senior market analyst for New York–based Real Capital Analytics. “CMBS is lending on product the GSEs wouldn’t lend on—it may be prestabilized properties, or deals in secondary or tertiary markets.”
Read More: http://www.housingfinance.com/aft/articles/2012/may-june/0512-frontlines-CMBS-Heats-Up-But-Is-It-Back-to-Stay.htm
The shadow market now has its first government program.
The Federal Housing Finance Agency (FHFA) rolled out the pilot phase of its Real Estate Owned (REO) Initiative in February. The program allows investors to buy foreclosed single-family properties in the nation’s hardest-hit metros, with a catch—those properties must remain rentals for a certain number of years.
Fannie Mae is supplying the first round of foreclosures, offering pools of various types of assets, including homes already being rented, vacant properties, and nonperforming loans. But it’s just a guinea pig to test investor interest, operational strategies, and financing structures to prove the idea out.
The biggest question is, how will that management challenge cut into an investor’s return? “The yields in scattered single-family are still very uncertain—it could be on par with the low cap rates we’re seeing, because of how management-intensive they are,” says Ben Thypin, director of market analysis at New York–based research firm Real Capital Analytics. “Figuring out how to manage scattered sites is the puzzle. Whoever can figure out how to do that properly will make a lot of money.”
Read More: http://www.housingfinance.com/aft/articles/2012/march-april/0312-feature-The-Top-5-Risks-of-Single-Family-Rentals.htm
Around this time last year, many conduit lenders were getting pretty excited.
The CMBS industry appeared to be back in full force, quoting rates that were competitive with Fannie Mae and Freddie Mac for the first time in years. Borrowers suddenly had more options, agency and balance-sheet lenders suddenly had more competition, and the industry as a whole was enticed by the prospect of more liquidity.
Yet, as soon as it came, it disappeared—rates came down too far, too fast, and investors pushed back. Then, capital markets shocks like the debt ceiling standoff and the Greek debt crisis continued to derail the CMBS industry’s momentum.
But now, through the first few months of 2012, CMBS pricing continues to fall.
Will that momentum build to a point where conduits are again giving the GSEs a run for their money? “I’m not even sure if that’s the right way to look at it because the rates being offered by the GSEs right now are so good,” says Ben Thypin, a senior market analyst for New York-based Real Capital Analytics. “CMBS is lending on product the GSEs wouldn’t lend on—it may be pre-stabilized properties, or deals in secondary or tertiary markets.”
Read More: http://multifamilyexecutive.com/cmbs/cmbs-heats-up-but-is-it-back-to-stay.aspx
When Arenda Capital Management LLC bought an Atlanta apartment complex whose owners defaulted on a $26 million loan, they did something distressed investors rarely do: They paid full price, deciding not to wait for lender LNR Partners to foreclose and face competition from other acquirers.
“If I don’t buy the deal, then it may be 12 to 24 months before I’d have another chance to buy it, and they still may not be selling unless I make them whole,” said Ryan Millsap, managing principal at Los Angeles-based Arenda, which bought the 592-unit property in October.
Demand for U.S. apartment buildings is surging as the homeownership rate hovers near the lowest level since 1998 and government-supported mortgage companies provide record levels of financing for apartment properties. That’s fueling a rush by investors to buy buildings and helping lenders recover 75 percent of the value of defaulted mortgages tied to multifamily housing, the highest recovery rate on all commercial property.
Sales of U.S. apartment properties totaled $3.8 billion in January, a 53 percent increase from the same month a year earlier, the strongest start to the year compared with offices, and shopping centers, according to Real Capital Analytics Inc., a New York-based commercial property data firm.
Fannie, Freddie LoansThe dollar volume of multifamily loan originations by Fannie Mae and Freddie Mac hit an all-time high in the fourth quarter, according to a Mortgage Bankers Association index that has tracked the data for 11 years. The government-supported entities increased lending by selling $33.9 billion of bonds tied to apartment buildings last year, from $21.6 billion in 2010, according to data compiled by Bloomberg.
“Freddie Mac and Fannie Mae originate a huge portion of the loans out there for apartments,” said Ben Carlos Thypin, director of market analysis for Real Capital Analytics Inc. “If a buyer can secure cheap financing, whether from a government sponsored entity or elsewhere, that allows them to be able to pay more for a property.”
Read More: http://www.bloomberg.com/news/2012-03-07/recovery-on-commercial-property-fueled-by-apartments-mortgages.html
“Life insurance companies have been more active on the portfolio side with the higher-quality assets,” says Ben Thypin, senior market analyst for Real Capital Analytics. “And regional banks are being more active as well with the lower quality assets.”
Read More: http://multifamilyexecutive.com/debt/private-sector-heats-up-in-battle-with-gses.aspx
“For quality assets, there’s intense competition, and cap rates are declining because of these assets,” says Ben Thypin, a senior market analyst at New York-based Real Capital Analytics. “Owners see this cap rate environment, and the financing environment with Fannie Mae and Freddie Mac, and they think that maybe this is a good time to capture a piece of this unique pricing environment.”
Read More: http://www.housingfinance.com/aft/articles/2010/july-august/0710-upfront-Acquisition-Market-Heats-Up-as-Cap-Rates-Fall.htm
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.