Commercial/Multifamily News Briefs Oct. 20, 2022

Freddie Mac Multifamily to Expand Affordable Housing Supply Initiative

To help address the national rental housing shortage and affordability crisis, Freddie Mac Multifamily, McLean, Va., will ramp up financing that supports newly constructed or substantially rehabilitated multifamily housing.

The company said it will leverage new flexibilities granted by FHFA that allow for more use of forward commitments, which are agreements to purchase loans at a later date with certain financing terms locked in today. The agreements provide greater certainty to construction lenders and housing developers by limiting risks they face when executing complex multifamily deals in volatile markets. Freddie Mac proposed greater use of forward commitments in its Equitable Housing Finance Plan.

“One of the most complicated factors in determining how, where and when to build or rehabilitate a multifamily property is market uncertainty, and that’s particularly true right now,” said Steve Johnson, Vice President of Production & Sales at Freddie Mac Multifamily. “Our forward commitment program can take some of those concerns off the table, allowing construction lenders, developers, nonprofits, municipalities and others working to support affordable housing to get the math right and move forward. This move will help us add or preserve thousands of affordable multifamily housing units every year.”

FHFA previously subjected forward commitments to Freddie Mac’s annual production cap ($78 billion for 2022) but will now exempt a certain amount ($3 billion for 2022) of forward commitments from the cap. Separately, FHFA is lifting its $500 million cap on forward commitments for properties that do not benefit from a Low-Income Housing Tax Credit (non-LIHTC forwards). The company’s non-LIHTC forward business will instead be subject to the annual exemption on forwards, along with LIHTC forwards.

Overall, the changes grant Freddie Mac additional space and flexibility to execute forwards for affordable and workforce housing.

Eastdil Secured, Project Destined Launch Commercial Real Estate Bootcamp

Real estate investment bank Eastdil Secured, New York, and Project Destined launched their fall commercial real estate bootcamp.

The program stems from Eastdil Secured’s existing partnership with Project Destined and consists of a five-week “bootcamp” training program, where 50 students across the U.S. will learn from more than two dozen Eastdil Secured professionals and mentors about key topics in the commercial real estate industry.

This bootcamp will provide an opportunity for Project Destined students to learn from leaders in commercial real estate investment banking, as well as earn both an ARGUS certification from Altus Group and a Financial Modeling Certification through Project Destined’s partnership with NYU Schack Institute of Real Estate and Columbia Graduate School of Real Estate. In addition to weekly bootcamp sessions, accepted fellows will receive scholarships to participate in Project Destined’s paid virtual internship and bootcamp activities, including visits to Eastdil Secured offices across the U.S.

As part of the bootcamp program, Eastdil Secured professionals and mentors will prepare, engage and guide students one-on-one to help them develop a range of fundamentals — including financial, technical, presentation and leadership skills—designed to aid their search for internships, certifications and full-time employment in the commercial real estate industry.

Enterprise Community Partners Launches $250 Million Fund to Turn Rent Payments into Long-Term Wealth

Enterprise Community Partners announced its affiliate Enterprise Community Investment launched the Renter Wealth Creation Fund to provide renters the wealth building opportunities traditionally limited to homeowners while preserving up to $1 billion in affordable and workforce homes.

Backed by Enterprise’s national affordable housing platform and decades of fund management experience, the fund, which has set a goal to raise $250 million from investors, offers a return for investors and upward mobility for renters, who earn both immediate cash back for on-time rent payments and the opportunity to share in the appreciation of the property over the long term. Enterprise expects the fund to preserve 7,000 homes.

“The Renter Wealth Creation Fund is a direct response to what renters have told us they want: more cash in hand today, and the opportunity to achieve upward mobility over the long term,” said Lori Chatman, president of Enterprise’s Capital division. “With their feedback, we created a financial innovation that offers returns to investors, loyalty and stability to property owners and—for the first time—real wealth-building potential for renters.” (Chatman will assume the role of interim co-CEO of Enterprise beginning in November.)

Informed by residents, the Renter Wealth Creation Fund provides critical benefits to residents of affordable rental housing developments in which it invests:

1.     Cash Back: Every month, residents who make on-time rent payments receive cash back through Stake, a mobile app that allows the seamless transfer and use of these reimbursements.

2.     Resident Services: Each property will offer services tailored to the needs of the residents.

3.     Shared Appreciation: Like homeowners cashing out from a sale, long-term residents—current and former—can receive a share of the profits if the property is refinanced or sold for a profit. When this occurs, investors receive a targeted financial return of 4%, and residents who lived in the building for at least four years are expected to receive 80% of the financial upside thereafter as an additional cash-back reward.  

Homeownership has historically been the gateway to upward mobility for most Americans, and the average homeowner today has 40 times the wealth of a renter. But systemic inequities have kept homeownership out of reach for many low-income families, and particularly for people of color impacted by discriminatory housing policies. More than half of Black and Latino households are renters. The Renter Wealth Creation Fund rebalances the dynamic with a commonsense solution.

“The Renter Wealth Creation Fund recognizes that there is more than one way to build wealth, and more than one way to define it,” said Chris Herrmann, chief investment officer and fund manager of Enterprise’s real estate equity business. “Through focus groups and surveys, residents made it clear that wealth is not just a long-term return. Wealth is also having enough money to know next month’s rent bill will not break the bank; to order dinner in instead of cooking after a long day at work; or to treat the family to an afternoon at the movies. The Renter Wealth Creation Fund was designed to reflect that reality.”