JLL: FANNIE, FREDDIE FACE INCREASED COMPETITION IN 2013

February 6, 2013

SAN DIEGO — While government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will continue to dominate the multifamily finance landscape in 2013, Jones Lang LaSalle writes in a newly released report that it expects life companies, national banks, financial institutions and CMBS lenders to further increase their market share this year.

“Plentiful capital, ease of execution, and the sweet spot in the seven- and 10-year, fixed-rate, 80 percent loan-to-value financings kept the agencies on top in 2012,” says Faron Thompson, international director and leader of Jones Lang LaSalle’s Freddie Mac Program Plus lending business.

Apartment finance was a hot topic this week at the Mortgage Bankers Association’s (MBA) Commercial Real Estate Finance/Multifamily Housing Convention & Expo. Approximately 2,600 industry professionals registered for this year’s event held at the Manchester Grand Hyatt San Diego.

Analyzing the numbers

Fannie Mae provided $33.8 billion of financing to the multifamily industry in 2012 compared to roughly $29 billion for Freddie Mac. Holly Minter, executive vice president with Chicago-based Jones Lang LaSalle, anticipates even more growth potential for the GSEs in 2013.

“We expect those numbers will continue to rise this year by about 10 to 15 percent for both Freddie and Fannie, but life companies, balance sheet lenders and CMBS lenders are increasingly muscling their way into the scrum with higher leverage, creative prepayment structures and shorter loan terms.”

Investor appetite for the apartment sector is nearly insatiable these days. In fact, apartments have replaced office as the top investment sector in the United States for the first time in more than a decade, according to Jones Lang LaSalle. With that demand comes a commensurate need for debt capital.

The attractive lending environment led to a… Read more…

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