Commercial/Multifamily Briefs Jan. 26, 2023

Dwight Mortgage Trust Launches CRE Rescue Capital Fund

Dwight Capital, New York, and its affiliated REIT, Dwight Mortgage Trust, launched a “rescue capital” preferred equity and mezzanine debt platform to assist sponsors with equity shortfalls in connection with permanent loan refinancings.

Given the current rate environment, Dwight expects a significant percentage of loans closed over the past several years–particularly floating rate bridge loans–will be unable to achieve cash neutral refinancing via HUD, Fannie Mae, Freddie Mac or CMBS.

Dwight’s rescue capital strategy targets multifamily, mixed use, office, retail, independent/assisted living properties valued between $10 million and $75 million throughout the United States.

“Together with our existing bridge loan and construction lending products, the added preferred equity and mezzanine capabilities will assist Dwight Mortgage Trust in deploying over $2 billion of new loan originations in 2023,” Dwight Chief Investment Officer Tim Groves said.

“Given the unprecedented number of loan maturities coming due in the next year, we want to be there to help our partners get through this period of lower-than-expected proceeds and higher than expected rates by providing them with solutions that will help them bridge the gap to recapitalization and future stabilization by providing them with creative financing solutions.” said Adam Sasouness, co-founder of Dwight Capital and Dwight Mortgage Trust.

DMT is partnering with Miami-based 27 Capital, a real estate private equity firm founded and led by Arash Gohari, on this initiative.

Freddie Mac Multifamily’s Targeted Affordable Housing Loans Increased by Nearly 60% in 2022

Agency Met All Multifamily Affordable Housing Goals as Year-End Volume Totaled $73.8 Billion

Freddie Mac Multifamily’s 2022 production volume totaled $73.8 billion, including a record of nearly $1 billion in Low-Income Housing Tax Credit equity investments. The agency also increased its targeted affordable loan purchases for properties that have a regulatory rent restriction or subsidy by close to 60% to a record $15.3 billion in 2022, up from $9.6 billion in 2021.

“In a year marked by record rent inflation and a rental housing supply crisis, Freddie Mac Multifamily prioritized its affordable housing mission,” said Kevin Palmer, head of Freddie Mac Multifamily. “Not only did we exceed our aggressive affordable housing goals, but we also set a record for Targeted Affordable Housing, ramped up our LIHTC equity investments by 45% and made nearly $2 billion in forward commitments designed to bolster future housing supply.”

Freddie Mac exceeded all its FHFA-set affordable housing goals. Of the 693,000 rental units financed through loan purchases, more than 420,000 were affordable to low-income households earning up to 80% of Area Median Income, surpassing the 415,000-unit goal. Units affordable to very low-income households earning up to 50% of AMI totaled nearly 128,000, representing 145% of the 88,000 unit goal. Freddie Mac also met 118% of its low-income housing goal for properties with 5 to 50 units with 27,103 units.

In total, nearly 69% of Freddie Mac Multifamily’s volume qualified as mission-driven affordable housing, far surpassing the 50% goal set by the FHFA. As a measure of units financed, 96% of Freddie Mac’s loan purchases supported units affordable at 120% of AMI, 74.1% supported units affordable at 80% of AMI, 43.7% supported units affordable at 60% of AMI and 22.5% supported units affordable at 50% of AMI.

Freddie Mac took action to address the affordable housing supply shortage through a record $1.9 billion in forward commitments, supporting 20,000 future new or rehabilitated affordable housing units. Forward commitments 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 is slated to convert more than 500 forward commitments in the next three years, totaling nearly $8 billion. The company converted 137 forward commitments in 2022, totaling nearly $1.7 billion.

Other 2022 highlights include:

•             $4.4 billion in Small Balance Loans (SBL; through Freddie Mac’s SBL offerings)

•             $2.7 billion in Seniors Housing Loans (including senior-living apartments)

•             $1.6 billion in Student Housing Loans Last year Freddie Mac securitized $65 billion through its many offerings, transferring a large majority of expected and stress credit risk to third-party investors.