LENDERS RETHINK MULTIFAMILY

November 6, 2012 | 7:00 am ET Staff Reporter

Almost 5,000 apartment units will deliver in Baltimore and Howard counties in the next three years, says Delta Associates CEO Greg Leisch. Developers show no signs of slowing down either, but lenders are playing their part to stymie massive overbuilding.

Greg tells us 15 projects totaling 3,500 market-rate units are under development in Baltimore and Harford counties now, and another seven with 1,400 units likely will break ground and deliver within three years (not counting the 3,000 on their way to Howard and Anne Arundel counties). That'll more than satiate the market, he says. But his firm's clients are getting stricter on underwriting. That means not allowing trending of rents to make a deal work and lower LTV ratios. Oh, and when you see Greg in DC for our national BisnowMultifamily Annual Conference Nov. 19-20, fresh back from his Australia vacation, ask him if camel tastes like chicken.

Harbor Group International CEO Jordan Slone, who's also speaking at our event (inquiring minds can sign up here), says lenders and builders should be responsible for avoiding oversupply. Multifamily fundamentals will remain solid, Jordan tells us, but rental growth could slow in the coming years. Harbor Group's latest deal: financing a $130M transaction with JPMorgan on the 1,200-plus unit Villages at Morgan Metro in Landover, Md. (near the Redskins home field, but we'll forgive them).

Pantzer Properties' Jason Pantzer (with bro and colleague Jordan) tells us that even if distressed multifamily acquisitions are rarer,partnership breakups and other special opportunities will continue. (Good news because his firm targets $250M to $500M acquisitions.) Perhaps a minority partner wants out, a fund in the JV is unwinding, debt on other properties in a fund's portfolio is coming due, one party is overlevered, and so forth. That's where Pantzer steps in, as in its $168M acquisition of the Silver Spring, Md., Georgian high-rise it purchased out of bankruptcy last month and the $460M purchase from RREEF and Bainbridge Capital of the 2,580-unit, DC-area Magazine portfolio last year. Sign up here to join these three and 30 other speakers at BMAC in DC on Nov. 19 and 20.

LENDERS RETHINK MULTIFAMILY

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