Everyone's Favorite Loan, Part 1: Agency Structured ARMs for Multifamily

Job and population growth across Texas is keeping multifamily the preferred asset type for institutional and private investors, says CBRE’s Jim Kirkpatrick (left, with his wife at their daughter’s wedding). With that, he's seeing a lot of multifamily sponsors gravitating to the agency structured ARMs. His debt and structured finance team has been doing seven- and 10-year terms floating over LIBOR. With some interest only, these loans are a great way to enhance their yield, he says. Plus, with structured prepay and the ability to fix the rate, borrowers can limit their rate risk exposure, too.

Jim says a good example of these deals is the $45M loan for a JV of RailField Realty Partners and Artemis Real Estate of the 612-unit Class-A Signature Ridge (pictured) multifamily community at 3711 Medical Dr in San Antonio. The loan carries a 10-year floating-rate term, with five years of interest-only, and an approximate loan to value of 70%. Financing was provided by Fannie Mae.

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