Q&A With M&T Realty Capital’s Michael Berman, CMB, and Jeffrey Rodman
MBA NewsLink interviewed M&T Realty Capital Corp. President & CEO Michael Berman, CMB, and Affordable Housing Program Manager Jeffrey Rodman about MTRCC’s business lines and affordable housing efforts.
Michael Berman, CMB, is the leader of MTRCC, a national commercial real estate lender focused on commercial and multifamily finance through Fannie Mae, Freddie Mac and FHA programs, its own bridge loan balance sheet programs, as well as correspondencies through life companies and CMBS programs. MTRCC closed over $5 billion in loans in 2019 and has a servicing portfolio exceeding $22 billion.
Berman is a former Chairman of the Mortgage Banker Association.
Jeffrey Rodman is the Affordable Housing Program Manager for M&T Realty Capital Corporation, the wholly-owned commercial mortgage banking subsidiary of M&T Bank. He has more than 23 years of experience in affordable housing finance, with prior stints at KeyBank Real Estate Capital, Bank of America, Credit Suisse and GMAC.
MBA NEWSLINK: Can you provide a brief overview of M&T Realty Capital Corporation’s business lines and a market update for each?
MICHAEL BERMAN: M&T Realty Capital Corporation is the wholly owned commercial mortgage banking subsidiary of M&T Bank, a top 20 U.S.-based bank. M&T Bank offers balance sheet lending products for commercial real estate. M&T Realty Capital Corporation offers nationwide permanent lending programs with Fannie Mae, Freddie Mac and FHA/HUD and correspondent lending programs with life insurance companies and CMBS lenders.
While historically a multifamily lender, M&T Realty Capital has grown its seniors housing lending over the past few years, earning a Top Five Fannie Mae Seniors Housing Producer ranking in both 2018 and 2019. The company is consistently ranked as a Top Ten HUD lender for both multifamily and healthcare lending and was also ranked a Top Five Fannie Mae Green Producer in 2019. We’ve continued to grow our industrial, office and retail lending since the acquisition of the former CKPP (Carey, Kramer, Pettit & Panichelli, a Philadelphia-based life company correspondent) in 2017, with this platform now comprising about 20 percent of our annual lending volume.
Conventional Multifamily – While market fundamentals for multifamily were very strong on a nationwide basis heading into the current crisis, substantial uncertainty now persists for the short term until a vaccine and therapeutics for COVID-19 normalize our economy. Long-term concerns over the impacts of COVID-19 are moderating.
Due in large part to the CARES Act–including PPP and increased unemployment payments–nationwide rent payment rates have generally been 90 percent or more, which are higher than initially expected. It is noteworthy that relatively few multifamily borrowers have applied for the forbearance programs offered by Fannie Mae, Freddie Mac and FHA–a contrast to the hospitality and retail sectors.
We have seen a recent increase in FHA/HUD business and Agency business as borrowers look to lock in today’s record low rates for long terms. While some market players are waiting for a return to the “new normal” before proceeding with sales and/or refinancing activity, we are continuing to quote and close loans, albeit with new procedures in the areas of inspections, appraisals, notarization and recordings.
Seniors Housing & Healthcare – There is substantial uncertainty in the seniors housing and healthcare arena due to the current crisis. In some hot spots, COVID-19 has had dramatic impacts on occupancy rates. Certain states and cities have prohibited new admissions and some families have opted to move their loved ones out of communities.
However, there is some optimism in several markets as pent-up demand should help offset declining occupancies over the next few months as communities start to reopen. Expenses have also been significantly impacted with both higher staffing costs and the need for more personal protective equipment and testing. To help with these issues, skilled nursing facilities have received three rounds of federal stimulus money. Seniors housing communities have not received any federal assistance to date.
Affordable Housing – One of the areas being highlighted during the current crisis has been affordable housing. Prior to the COVID-19 pandemic there was a severe shortage of affordable housing units in this country. Now, with more than 40-plus million jobless claims filed in the last few months, finding an affordable place to live will be more crucial than ever. One of my initiatives upon joining M&T a year ago was to launch an affordable housing platform. We recently hired Jeff Rodman to head this new program, and we are in the process of launching our fully integrated platform with LIHTC equity and construction-bridge loans offered in a one-stop-shop.
Commercial Real Estate – Each subsector has been affected by COVID-19 differently, depending on the level of lockdown in each region and whether the tenants in certain properties were deemed essential. At one end of the spectrum, industrial (especially warehousing and essential manufacturing) has continued to perform well. In contrast, the hospitality sector is clearly experiencing substantial cash flow issues. Office and retail have taken hits in certain markets, with weaker retail tenants experiencing substantial issues which could be reflected in increased vacancy and reduced rental rates. As officials are taking a measured approach to reopening in various states, consumer spending will dictate the next chapter. While this measured approach to re-opening is essential to prevent–or at least moderate–another spike in COVID-19 cases, it is certainly difficult for many commercial property owners.
An important question is whether the new behavioral habits being developed, such as work from home and increased shopping on-line, will have a long-term impact on office and retail property occupancies and rental rates.
NEWSLINK: How is M&T Realty Capital positioning itself to serve the evolving need for more affordable housing?
JEFF RODMAN: Owners and developers need capital that is committed to this space to get new units on the ground and to preserve the existing affordable housing stock. M&T has created a dedicated affordable housing platform with the requisite expertise to provide the market with flexible and creative capital. Between M&T’s balance sheet and M&T Realty Capital’s loan programs from Fannie Mae, Freddie Mac and FHA, we can finance 9 percent LIHTC, tax-exempt bond/4 percent LIHTC, preservation and workforce housing transactions with construction loans, bridge loans, LIHTC equity, letters of credit, equity bridge loans, lines of credit, pre-development loans, land loans, bond underwriting capabilities and various permanent financing options.
NEWSLINK: Any perspective you can share on ways the private sector can partner with other market participants to help address increasing supply constraints?
RODMAN: To be effective in the market, various sources of capital will need to work together in a cohesive way. It will take creativity and accommodation with financial products such as first mortgages, subordinate financing, equity, grants, etc., working together to fulfill the needs of the market.
NEWSLINK: Christine Chandler, M&T Realty Capital’s Chief Credit Officer and COO, currently co-chairs MBA’s Affordable Rental Housing Advisory Council. How does M&T see the work of this council impacting the industry?
BERMAN: The Affordable Rental Housing Advisory Council is an important part of MBA’s work, and I am very appreciative that Christine was willing to serve in this capacity. Co-chairing a council like this is a significant responsibility and represents both Christine’s personal commitment and M&T’s corporate commitment to affordable housing. The council’s recent work on recommended distribution options for any rent stimulus measures passed by Congress will help to ensure that such measures will be implemented as intended.
NEWSLINK: What recent policy changes have been particularly important to the multifamily industry and/or to M&T?
BERMAN: M&T Realty Capital appreciates the work that MBA and its various committees have put into advocating for solutions for multifamily lenders and servicers during the COVID-19 pandemic. MBA and other industry organizations have continued to press for clarity on important provisions of the CARES Act, as well as additional solutions to continue to provide liquidity to the market during this unprecedented time.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at email@example.com; or Michael Tucker, editorial manager, at firstname.lastname@example.org.)