Discover and read the best of Twitter Threads about #Multifamily
Most recents (6)
1/n Higher/rising rates $TLT & 2023/24 unit deliveries have weighed on #multifamily #REITs $AVB $CPT $EQR $ESS $MAA $UDR over the past year. I see the credit events $SIVB $FRC $SBNY $KBE of the past week being a positive for the sector as:
2/n Small/Med banks are a key lender to developers. Last week (prior to bank crisis), at Citi conf $MAA CEO said that new MF permitting had come to a halt due to rising rates/spreads/const costs. Bank crisis will further curtail development. LOWER SUPPLY
3/n 10y now below 3.5%. MF REITS are low leverage (sub 30% LTVs) and primarily access debt financing through corporate bond market. While banks will be reticent to lend, I see debt costs for the REITs heading lower 
If you own land and want to develop multifamily housing on it, you could get an 85%+ LTC construction loan that might even allow for cash out. How? Land equity and an often unknown HUD detail: BSPRA 🧵
What is BSPRA? BSPRA stands for Builders/Sponsors Profit Risk Allowance. It is an option under the Section 221(d)(4) program which requires:(1) an established identity of interest between
the borrower and general contractor and (2) the GC’s profit to be satisfied outside of loan.
the borrower and general contractor and (2) the GC’s profit to be satisfied outside of loan.
In exchange for this structure, the recognized costs in a development (not including land) are artificially increased by 10%. The 85% loan to cost calculation is then made on
the higher cost figure, resulting in a higher insured loan amount (roughly 93% of recognized cost)
the higher cost figure, resulting in a higher insured loan amount (roughly 93% of recognized cost)
HUD multifamily finance is the best kept secret in the industry. Many believe that only affordable/subsidized/rent restricted properties qualify, but this is not the case. 🧵
HUD MF financing is often the best option for medium to long term holders that are looking to build generational wealth. Not only do HUD’s programs offer the best terms in the business, they also offer the lowest rates as well. forbes.com/sites/forbesre…
HUD’s 221(d)(4) program for the construction or sub rehab of market rate multifamily housing includes terms such as: 85% LTC, non-recourse, 40 year term + construction period, fixed rate, fully amortizing
There’s painfully few ways to create alpha in the multifamily biz. The most effective can be
Creating a dope retail/restaurant scene nearby. As opposed to say individual unit renovations, this approach when executed properly works simultaneously
On many units (thousands even) at zero marginal cost. The trick is in the execution and that’s where I get excitable.
$CPT -Private market sells us that NAV here is ~$125. Good mgmt track record; should trade at a premium. Baird & $BAC putting out usual sellside nonsense today (how is it worth 10% less than yesterday $BAC?). $BAC thinks it knows better than $billions in private mkt skin in game
participants. Haha. Notes from call: There is a strong bid for Class B value add (apartment classes explained here) apartments in the private market. The cap rate spread between Class B 'value add' apartments and Class A apartments has narrowed considerably over the last couple
of years. Camden plans to take advantage of the relative strength of the Class B pricing by selling Class B and rotating the proceeds into Class A assets. This will reduce associated capital expenditures over the life of the asset. Overall this makes sense to rotate into higher
Increasing development capacity is one policy tool available to @SeattleCouncil to address the #housing #gap for people across the income spectrum.
We must build more #affordable #housing and market rate housing to meet the demands of the people currently here and those that are still coming here.
This #MHA legislation is one tool in our tool box to both incentivize the construction of #affordable multifamily housing or capturing precious and limited dollars to provide to our non-profit #housing developer community to meet the demand for affordable #multifamily housing.
