Tips For NYC's Free-For-All Multifamily Market
Capital may be plentiful for multifamily, but this ain't no Wild West. There are rules and business models, so we're gathering sector-specific finance experts like Meridian Capital Group and Centerline Capital Group to guide us atBisnow's 4th Annual NYC Multifamily Summit,March 12. Investors and lenders pay more attention to the value-add opp (repositioning, re-tenanting, and new development) than to the submarket, says Meridian CEO Ralph Herzka. Low cap rates mean even stabilized assets need to offer a way to create value. He says capital also is available for small and first-time buyers (some lenders even focus on them), though lenders might ask them to work with a managing agent. And multifamily could double to 14% of a growing CMBS volume, perhaps easing a concentration on balance sheet and agency lending.
Centerline Capital Group's Steve Cox says capital is in demand for ground-up or rehab projects in Brooklyn that have been up and running for less than six months. Centerline is seeing more requests for 10-year loans (the boroughs typically go with five) to lock in the low rates for longer. And what about refis? He says the risk in NYC is past. Low cap rates and rising rents mean even the CMBS deals that originated in '07 are no problem. His firm has been pressuring Fannie and Freddie to be more competitive with NY banks, which have already been offering loans longer than seven years, over $10M, and non-recourse--and at better rates. As for his wall decoration? Shoot for a fancy car; if you fall short, at least you get a pair of fuzzy dice. Sign up to hear from these guys and 11 other multifamily pros next Tuesday.