Wells Fargo (Access1) LDCRE
December 2, 2014

And Now for the
Multifamily Deluge

Moseley Construction is a world-class "customer first" construction firm. It specializes in multifamily projects, both new and renovated. Find out more here.

Get ready for a monster storm of refinancings, Walker & Dunlop chief Willy Walker told our national Bisnow multifamily summit (“BMAC”) last week at the JW Marriott. And for some incredibly good terms and rates.

Around $200B a year of CMBS financings during 2005 to 2007 are coming due, and many who took floating-rate mortgages last year when rates spiked will potentially convert to fixed, Willy said. Fannie and Freddie are back as dominant sources of multifamily capital. And life companies are delighted to invest in low leverage (below 65% LTV) trophy assets with Class-A sponsors in major MSAs like DC. Even HUD products are off the charts: He just saw a loan locked in for 40 years at 3.62%.

Electrical Alliance (Training) MDCRE

If rates stay near current levels, Willy said, we won't see the need for equity or mezz that many thought was coming. And he predicts real GSE reform is on hold until the President and Congress are of same party.

CohnReznick (Field) MDCRE

Goulston & Storrs' Debbie Horwitz also drew Willy out on his experience leading his third-generation company from 45 employees and one office in ‘03 to 475 employees in 22 offices today, in the process becoming the largest Fannie lender and No. 3 Freddie. Willy said it helped to go public in 2010, despite the economic and culture risks; they've been able to make big acquisitions like CW Capital in 2012 and Johnson Capital this year. It also helps he's personally taken 142 client meetings through Q3. And that he's an endurance athlete, who does the likes of 105-mile bike rides. Not just because it gives him competitiveness, he explained, but because he can pack a bike on trips and bond with clients (at least those who also like marathons or polar plunges).


Delta Associates chief Greg Leisch told the crowd it's still a great time to be in multifamily—apartment absorption continues to rise and building sale prices are up 16% in last 12 months (more than any other asset class). And lifestyle shifts are favorable: young people don't drive as much; they've reversed a 40-year trend of flight from cities; and a higher fraction have taken on student debt and face fewer job opportunities, making purchases less affordable. So he sees continued strong demand for rentals, and predicts 2.7% annual national rent increases.

On the Mid-Atlantic panel, Angelo Gordon's Christina Winstead said weak job and wage growth in DC is being offset by abundant capital for multifamily development, the hope that defense spending will come back in '15 and continued high absorption. Cassidy Turley's Chris Doerr said whatever's near a Metro and inside the Beltway is likely to do well. Contractor Johnny Moseley said his multifamily construction revenue has pretty much doubled every year. Under questioning from Arent Fox's Patrick Nickler, experts from Mill Creek, BKV Group and Federal Capital Partners expressed similar guarded optimism. Some pointed out both the concern and the upside that much of the action to date has been in Class-A, but that residents in Classes B and C are eager for upgrades that can afford them safer and cleaner places to live.

Former head of NMHC (14 years) and MBA (7 years) Jonathan Kempner, left, moderated a policy discusssion with what he called the “Double Dougs,” likening them to Mantle and Marris , and Jordan and Pippen: Doug Bibby, at mic, is current NMHC president and Doug Culkin leads the NAA. (Supplemented by former Senate Banking Committee staff director Dwight Fettig.) They discussed the gamut of legislation—immigration reform (should landlords be expected to police the system?), housing finance reform (will a Fannie/Freddie bill come to the floor now that Harry Reid won't be able to block it?), energy benchmarking (should data be public?), and copyright (should you have to license music in elevators and movies in your common areas?). Outlook: cloudy, reflecting Capitol Hill impasse. (More panel coverage tomorrow.)

Among the 500 on hand during the two days of the conferece were not only CohnReznick national real estate chair Dave Kessler and Urban Igloo's Rick Gersten, left and center, but Rick's son Nate, who's been interning at the Sheridan Property Co. and getting his real estate license. Rick tells us Urban Igloo, here and in Philadelphia,  has teamed with six other rental brokerages around the country to work together with individual and corporate renters looking for help from city to city. Those renter leads are now converting to buyers, he says, opening a new track of business generation. Presumably Rick saves a lot of money on focus groups about Millennial tastes and just asks Nate.

Moseley (Difference4) DCRE
CREW (BakerTilly) DCRE
Washington DCEP (Dec9-2) DCRE
CohnReznick (Field) DCRE
Cardinal (Commonwealth) DCRE
Bisnow (Writers-Stop)

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Bialek's Healthcare Diagnosis

We see health clinics in shopping malls, but that's only the beginning. In the future, hospitals themselves will become specialty centers, offering acute care. Amanda Petrusky, director of design and project management for Bialek, says that this specialization trend has influenced healthcare design as well. Bialek, a design services firm offering interior modular construction, looks to “lean healthcare” as a process in which every clinic is pared down for maximum efficiency; the goal being improved outcome and increased patient satisfaction. Amanda also predicts the even more distant future, when much of our healthcare will be evaluated from home (imagine Skyped doctor conferences and testing equipment on a phone app). Amanda says the trend of physicians owning hospitals and clinics is new for them too; for doctors, it means taking back control and being more competitive in the marketplace. For more info on our sponsor, click here.


Financial Services Giant Plans Big Multifamily Buy

Apartment Realty Advisors could be sold for $110M. Keep reading to see who the buyer is.


The Multi in Multi-Family

Hong Kong's 7 million population is known as one of the most densely packed areas in the world. But even more so is its sister city, Kowloon. Most of those buildings in the distance are multifamily skyscrapers. They just look unimposing because your publisher snapped this picture a couple weeks ago from the top of a 1,500 foot high tower. (Even the vacant land in the foreground will soon be teeming--it will be the station for a bullet train to mainland China.)

Here's a typical relatively modern apartment complex.

And an older one.

And a much older one.

BMS (Innovation2) DC
Cleaners (Branding-Red) DCRE

Golden Not So Oldies

Thanksgiving is a heartwarming time for families to get together, and here's one that's been doing it 25 years: the annual lunch of folks you'll know who entered the business before 1990. Not to date them, but they used to do it at AV Ristorante; now they rotate and this year was at DC's Daily Grill. (You can also tell they're vintage because they still wear coats and that dangling silk thing around their necks.) Test your knowledge, and eyesight, by seeing if you can identify them. Here's the Teacher's Key: From left, Adam Singer, Rick Siegel, John Filipos, Bruce Pascal, Bill Kent, John Doub, Richard McBride, Carden McGeehee, Fern Barreuta, Brendan Owen, Geoff Kieffer, John Barron, George Voris, Pat Nalls, Tim Hague, Marc Magazine, Petch Gibbons, Pete Larson, Bob Peck and Ray Ritchey. Thanks to the group, which continued its tradition of donating to Big Brothers and Big Sisters. And, for the record, they're all still young, and you ain't seen nothin' yet.


Real Estate Jargon Explained

The commercial real estate business contains cool shorthand to make us sound smart, savvy and “inside.” However, we'll bet that there are many critical terms you still may not know, or want to know more about (but are afraid to ask). Bisnow Education's latest video gives you the glossary, and a clear explanation of each buzzword/term that will make you sound awesome at your next meeting. From LTV to NOI and all the alphabet soup in between, Peter Linneman, Wharton's Real Estate program founder and chairman, shares his extensive experience in easy-to-understand segments, term by term. This video is available to you for just $99, or purchase the entire Bisnow Education library for only $449. Watch a sample here, and order yours for personal enrichment or staff training. For group licenses, contact Will Friend at will@bisnow.com. Don't nod and pretend to understand when you really don't – get this video today.

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