The multifamily housing market is witnessing a resurgence, and developers see this sector as the first bright spot on the horizon since the Great Recession began in 2008. Financing for new developments is also making a comeback.
Major banks are again providing construction loans of 65 percent loan-to-cost on major-market apartment buildings. Interest rates can be 250 to 300 basis points over Libor, producing a rate near 3 percent. In addition, some insurance companies have provided 95 percent financing on a combined debt and equity structure with a senior loan of 60 to 70 percent LTC at rates of 3 to 4 percent and equity preferred yields of 7 to 8 percent.
On the permanent side, Fannie Mae and Freddie Mac rates are around 4 percent for a 10-year term, 30-year amortization loan, and some insurance companies are matching those rates. Clearly, the availability of inexpensive debt has allowed the institutional investors to accept the 4.5 to 5.25 percent cap rates being paid.
Read more...Multifamily Financing Expands via multihousingnews.com
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