Issue link: https://read.dmtmag.com/i/370270
The stars are aligned. If you are in the market to finance or refinance a manufactured housing community (MHC), the conditions couldn't be better. Last May's surge in interest rates quickly lost steam—and while rates today are higher than they were at the beginning of 2013, from a histor- ical perspective, they are exceptionally low. In fact, even though Treasuries are higher than early 2013, spreads have tightened, making it very at- tractive to get deals closed. And there are deals to be had! The Sunbelt and the West Coast are considered the best markets for buyers, but many are looking to the Midwest for the opportunity to buy distressed assets and achieve higher cap rates. Freddie Mac's announcement in April that it has decided to join Fannie Mae in purchasing and securitizing MHC loans means that an owner's or investor's ability to take advantage of those low rates and these opportunities has just increased substantially. Altogether, Freddie Mac is ex- pected to commit about $1 billion to the new pro- gram, on par with Fannie Mae. Freddie Mac launched their program using just four of its Program Plus® Seller/Servicers. Capi- tal One Multifamily Finance was one of them, and the reasons are straightforward. Capital One Mul- tifamily is one of the most experienced MHC orig- inators in the country, thanks to our long history in this business and an exceptional track record. As Beech Street Capital, we were the top national MHC producer for Fannie Mae in 2013. We also were a strong performer with Freddie Mac. We grew our volume with the agency by 24 percent in 2013, ending the year sixth on Freddie Mac's list of top sellers nationwide. The fact of the matter is that the Capital One Multifamily team has agency MHC financing in its DNA. Grace Huebscher, founder of Beech Street and president of Capital One Multifamily, intro- duced Fannie's lending program for manufactured housing communities as an agency vice president. And our team of MHC specialists, headquartered in the firm's Birmingham, Alabama office, col- lectively has several decades of experience in this market. In addition to agency financing, Capital One Multifamily has experience providing MHC cus- tomers a variety of financing options, including CMBS, life company, local bank, and balance sheet alternatives. CMBS is a great alternative to agency financing when asset quality is slightly below their standard or where there is an ancillary issue for Fannie or Freddie. For instance, Capital One Multifamily recently closed a deal in Colorado on a park in flood zone A using CMBS finance be- cause the buyers didn't have time to try to secure a waiver. Bank financing is another alternative we recommend, especially for smaller deals or when the borrower wants flexible prepayment terms or short-term debt. Capital One Multifamily customers also benefit from the deep commitment to service that has characterized our organization since its inception. When clients have hard closing deadlines, either with a loan maturity or purchase, they want to know that their lender will perform. In 2013, the Capital One team's average closing time was 45 days from application to closing, ensuring that there was a satisfied customer at every closing table. This commitment to service produces long- term relationships with customers, which in turn streamlines processes even further. For instance, working with a repeat borrower, the MHC team at Capital One Multifamily recently provided a $5.5 million Fannie Mae loan for a community in Peo- ria, Arizona, in just 40 days. No matter how many times we work with a customer, we ap- proach each transaction as if it were our first. For more information about how we can help you with your MHC financing, contact Damon Reed, Senior Vice President of Originations, Capital One Multifamily Finance, 205.601.2855, damon. reed@capitalone.com, or Monica Schroeder, Vice President of Originations, Capital One Multifam- ily Finance, 205.821.8914, monica.schroeder@ capitalone.com. Capital One Multifamily Finance MHC Lending Opportunities Pick Up as 2014 Draws to a Close Wells Fargo Multifamily Capital Wells Fargo is a leading lender in the manufactured home community (MHC) industry, having orig- inated over $6.5 billion in manufactured home community (MHC) mortgages since 2000. For the last eight years, Wells Fargo was named "Community Lender of the Year" at the MHI National Congress in Las Vegas and has also ranked #1 in total loan volume origination over that same period according to George Allen's annual National Registry of Landlease Community Lenders. This success is credited in part to Wells Fargo Multifamily Capital's specialized MHC team, led by Tony Petosa, Creighton Weber and Nick Bertino. They focus on arranging financing for MHCs and have over 65 years of combined experience spe- cific to the industry. This Wells Fargo MHC platform includes agency lending programs (Fannie Mae and Fred- die Mac) as well as conduit, balance sheet and correspondent lending programs such as life insur- ance companies. This range of programs enables our team to identify the pluses and minuses of dif- ferent lending alternatives and find the loan that best fits the needs of the borrower. Among the highlights of Wells Fargo's MHC lending platform are: • Experience: Wells Fargo's dedicated manu- factured home community team is familiar with is- sues unique to MHCs and how they can affect underwriting and financing terms. The MHC team has recently issued the eighth edition of its Manufactured Home Community Financing Handbook, which covers many of these issues. • Commitment and follow- through: The Wells Fargo MHC team supports Tremont Realty Capital Tremont Realty Capital is a perennial leader in the manufactured home (MH) and RV communi- ties finance industry. The firm is headquartered in Boston with offices in Chicago, Annapolis, Hart- ford, New York, and Newport Beach. While Tremont arranges financing for all types of commercial real estate, the MH/RV sector has been a consistent product type year after year. Two of Tremont's founding partners, Tom Lorenzini (Chicago) and John Chase (Annapolis), have been working together for over 20 years and special- ize in the financing needs of MH/RV community owners. The two have demonstrated expertise in this niche sector, having arranged over $2 billion in completed financings over the course of their careers. Borrowers today have many more financing options compared to even just a few years ago. This increase in financing choices, can lead to some confusion when choosing a lender. While the capi- tal markets players still include banks, CMBS, life companies and Fannie Mae, many new entrants have come into the space including private lenders, hedge funds, pension fund advisors and, most re- cently, Freddie Mac. These lenders have been enticed by the attractive risk adjusted yields MHC lending provides, as well as by the low, long-term default rate the industry has achieved. There are a myriad of questions a borrower must ask before proceeding with any one particular loan program. Questions to be considered include: What is my preferred loan term? Do I need prepayment flexibility? Is non-recourse important? Are additional loan proceeds more important than pricing (higher leverage = higher interest rate)? Do I plan to sell in the next few years? And, are future loan advances needed? In addition, many of today's operators have a rental home component to their traditional land lease community. The percentage of rental homes will also have an impact on the type of lender chosen. For instance FNMA prefers less than 5%; however \ 25 \ 27