Interest in multi-family investing on the rise
December 12, 2011
According to a November 2011 article in NuWire Investor, it appears that everyone wants a piece of multi-family. Buoyed by regulatory pressure on traditional lenders like Freddie Mac and Fannie Mae, investing by non-traditional lenders is on the increase. Life insurance companies now hold 6% of multi-family debt, increasing their holdings by 18% in Q2 2011 alone. In a report released by Chandan Economics in early November, which examined the 600 banks that hold the largest apartment lending exposures, 278 of these banks increased their net exposure to the apartment sector in the second quarter. Default rates on multi-family loans are now lower than for broader commercial real estate and have been on the decline since Q3 of 2010.
Further evidence comes in this MHN Online article, where Rohit Anand, a principal in the Washington, DC-area office of KTGY Group Inc., Architecture + Planning stated, “When we talk to investors, developers, and equity partners, the asset of choice for them to invest their money in right now is multifamily, based on the demand that they see coming from this generation. I won’t name names, but at some of the big Wall Street investment banks, the people in multifamily investment banking tell me that their peers on the office side, or retail or other asset classes are doing hardly any volume. All of the volume in these investment banks providing equity is to multifamily.”