MBA CREF 2021: A Conversation with GSE Leadership

(Clockwise from top left: Matt Rocco, Deborah Jenkins, Michele Evans)

One year ago, nearly no one could have predicted what 2020 would bring. Everyone in the real estate world had to adjust their expectations.

“What a year 2020 was,” said Matthew Rocco Sr., 2021 MBA Vice-Chairman and Chairman of the Board and CEO of Grandbridge Real Estate Capital LLC, Charlotte, N.C. “So much happened in such a short period. After going through what was an incredible 2019 and launching into 2020 with a lot of hope and optimism for continued success, who would have known there would be a full stop in the cards. I think we can all agree that we did not have a pandemic in our pro forma.”

Rocco moderated a panel discussion with executives from Fannie Mae and Freddie Mac at MBA CREF 2021. He said Fannie Mae and Freddie Mac responded quickly to the changes and challenges the pandemic brought.

Deborah Jenkins, Executive Vice President and Head of Multifamily, Freddie Mac, McLean, Va., called 2020 an unbelievable year that no one could have predicted in so many ways. “We recently announced our volumes, which were $82.5 billion, ending right at FHFA’s five-quarter, $100 billion cap,” she said. “It was a record year in terms of our securitizations at nearly $78 billion. But when you look at the numbers, they don’t really tell the story of the year and the headwinds, difficulties and challenges that our industry faced.”

Freddie Mac’s 2021 outlook for apartment rent growth and vacancy levels is slightly positive in most markets, Jenkins said. Gateway cities are having some challenges and some of the larger urban areas might see some slight rent declines and a small uptick in vacancies.

“From a value perspective, investors have been taking a long-term view of the multifamily sector and you haven’t seen declines in multifamily values thus far,” Jenkins said. She noted Freddie Mac was “cautiously optimistic” about 2021. “[But] I want to tread lightly, because one thing we learned in 2020 is that you can’t predict everything that is going to happen,” she said.

Michele Evans, Executive Vice President and Head of Multifamily with Fannie Mae, Washington, D.C., said 2020 was a high-volume year for the enterprise, which provided $76 billion in financing to support the multifamily market. “We have a positive but cautious outlook at Fannie Mae,” she said. “Demand is very different in different markets, but we think multifamily will continue to be a favored asset class in 2021. Hopefully, as vaccinations continue, the multifamily sector should benefit from that. We are positive but cautious there are signs that will lead us to brighter days.”

Housing affordability remains on both firms’ radar screens, Evans noted. “Affordability is so important,” she said. “It’s been important as long as we and Freddie Mac have been in business. It sits right in the center of what we do and it’s particularly important as we look to what we want to do more of.”

A lot of people suffered and many continue to struggle because of the pandemic, Evans said. “We have to continue to focus on what the market needs,” she said. “Given the pandemic that we’ve just experienced, the need for affordable housing gets even more emphasized. So we’ll continue to lean in. I think COVID makes affordability more important.”