Fannie Mae, Freddie Mac Still Going Strong

While federal banking regulators are applying pressure on banks, the federally sponsored Freddie Mac and Fannie Mae are turning up their multifamily lending.

The Federal Housing Finance Agency (FHFA) last week increased the 2016 multifamily lending caps for Fannie Mae and Freddie Mac, raising the caps from $35 billion to $36.5 billion for each effective immediately. It was the second increase this year.

The FHFA adjustment was based on increased estimates of the overall size of the 2016 multifamily finance market, which has been hotter than had been estimated due to continued high levels of property acquisitions and deliveries of newly constructed apartment units as well as record levels of loan maturities that require refinancing.

The FHFA’s view of a growing multifamily market is supported by the Mortgage Bankers Association’s June survey, which shows that multifamily debt originations are expected to grow from $262 billion last year to $273 billion this year to nearly $280 billion by 2018.

“We had a very strong first half, issuing more than $28 billion in multifamily securities and structured transactions,” said Josh Seiff, vice president of multifamily capital markets & trading at Fannie Mae.

In its mid-year multifamily outlook, Freddie Mac noted that underlying multifamily demand remains strong and will improve further next year as the market absorbs the wave of new supply working its way into the market.

“Dispersion across individual markets will continue, but increased supply or economic headwinds in some markets will not derail multifamily growth at the national level,” Freddie Mac concluded.*


HUD Names New Southwest Multifamily Regional Director

Mary Walsh was announced as the new Southwest Multifamily Regional Director for the Department of Housing and Urban Development (HUD).  Mary joins the Multifamily team from HUD’s Office of Healthcare Programs (OHP) where she managed Lender Participation for the past 8 years.  After joining HUD as a Presidential Management Fellow over 30 years ago, Mary has worked throughout the Department including in headquarters as a policy advisor to the FHA Commissioner and previously in Multifamily as a Branch Chief in asset management.

Tom Goade, who served as Acting Regional Director since last November, will transition to a senior advisor position to support production nationally through specialized underwriter training and process improvement. The Southwest region leads the country in production processing times, and Tom will now share his expertise with his colleagues around the country.**


Mortgage Rates Show Slight Change

Mortgage rates posted only slight changes this week, with the benchmark 30-year fixed mortgage rate inching to 3.57 percent, according to's weekly national survey. The 30-year fixed mortgage has an average of 0.25 discount and origination points.

The larger jumbo 30-year fixed dipped to 3.57 percent, while the average 15-year fixed mortgage rate moved up to 2.87 percent. Adjustable mortgage rates were slightly changed, with the 5-year ARM nosing higher to 3.07 percent and the 7-year ARM slipping down to 3.22 percent.

The uncommon quiet in financial markets fits the backdrop of the lazy days of summer, with barely any movement to speak of. This translates into mortgage rates as well, which are closely related to yields on government bonds. With financial markets in a summertime snooze, both bond yields and mortgage rates have been little changed in recent weeks. The benchmark 30-year fixed mortgage rate has moved a grand total of one-one hundredth of a percentage point since the beginning of the month. There has been slightly more movement on the larger jumbo mortgage, which reached a new record low this week of 3.57 percent. Fed Chairwoman Janet Yellen is giving a highly anticipated speech in Jackson Hole, Wyoming this Friday. Her appearance begs the question as to whether she will jolt financial markets awake with sharp words about a potential September rate hike, or tiptoe around so as not to disturb the summer slumber by noting the mixed economic signals and divided opinions within the Fed. We shall see.

At the current average 30-year fixed mortgage rate of 3.56 percent, the monthly payment for a $200,000 loan is $905.92.


30-year fixed: 3.57% -- up from 3.56% last week (avg. points: 0.25)

15-year fixed: 2.87% -- up from 2.84% last week (avg. points: 0.18)

5/1 ARM: 3.07% -- up from 3.05% last week (avg. points: 0.30)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets.***


REITs Appear Ready to Drive Senior Housing Dealmaking Again

Senior housing real estate investments trusts (REITs) have pulled back their acquisition activity since the end of 2015, and transactions during the first six months of the year tanked as a result. However, rebounding share prices are returning the capital advantage to the biggest players in the industry, and may help deal volume pick up at the tail end of the year.

And there are signs that this may already be coming to pass: A few billion-dollar-plus acquisitions announced in the third quarter of the year could signal that REITs are ready to reclaim the aggressive acquisition strategies they have cultivated over the last few years, particularly the “Big 3” players—Ventas Inc. (NYSE: VTR), Welltower Inc. (NYSE: HCN) and HCP Inc. (NYSE: HCP). But others believe new market headwinds could mean a slower return to normal in terms of transaction volume.

Cost of Capital Improves

Higher cost of capital kept senior housing REITs sidelined on dealmaking for several quarters, largely caused by lower share prices. Following a dip in the stock market at the beginning of the year, REITs seriously tapered off their M&A activity in the first and second quarter. During the second quarter of 2016, there were only 76 deals, which totaled $1.6 billion—the first time in which senior housing deals dipped below 100 transactions since the second quarter of 2013.

While stocks have recovered losses from the start of the year, other market conditions could make for a slow M&A recovery. Elements at play, including the Fed’s continued conservative interest rate environment, have helped REITs recover as well.

“Cost of capital has improved,” John Kim, analyst at BMO Capital Markets, told SHN. “Cost of debt has come down and the share prices have mostly gone up pretty significantly this year. While the cost of capital has improved, the REITs have been more selective on acquisitions compared to how they might have been two or three years ago.”

Instead of making major acquisitions in 2016, REITs have actually looked to pare down their portfolios and offload noncore assets during the first half of 2016, according to Britton Costa, analyst with Fitch Ratings. Others have sought out alternative strategies to recapture shareholder value, such as HCP Inc.’s (NYSE: HCP) decision to spin off its skilled nursing assets into a separate, publicly-traded REIT, announced in May.

“The three biggest buyers over the last three years are all looking to sell at the same time,” Costa told SHN. “Transactions have been low because there are more sellers than buyers. Why are health care REITs looking to sell? For one, they were adjusting to their cost of capital.”

The higher cost of capital impacted the public players more so than others, but the Big 3 have seen a steady favorable trend in their cost of capital at the end of 2016, according to data from the National Investment Center for Seniors Housing & Care (NIC).

Oversupply Headwinds

Cost of capital was not the only culprit in the backseat position of the REITs. The potential for disruptive oversupply in certain markets has added to the pullback.

“Right now, the market is concerned about new supply in senior housing,” Kim told SHN. “A couple years ago, there wasn’t as much supply, large acquisitions were accepted. Today, they are more scrutinized.”

“The pace of absorption has slowed in the past six months from 4,200 units in the fourth quarter to 1,200 in the second quarter,” Beth Burnham Mace, chief economist for the National Investment Center for Seniors Housing & Care (NIC), recently wrote in National Real Estate Investor (NREI).

Some of the absorption slowdown was due to seasonal changes, including a late flu season and “higher-than-normal disease incidence” reported by the Centers for Disease Control and Prevention (CDC), according to NIC.

“Even so, the increase of only 1,200 units was surprising, because the housing market remains on an upward trajectory in terms of the velocity of sales, home prices and low mortgage interest rates,” Mace wrote. “These factors provide a supportive backdrop for potential seniors housing residents as they try to sell their homes.”

However, the real estate market can’t be painted with too broad of a brush, and those looking for more granular insight into the health of certain locations can look to WalletHub’s recent findings of the top real estate markets and those that are still struggling.

Several of the best performing real estate markets—including the top three—lie in Texas, with Frisco, McKinney and Richardson, Texas, named as the best markets across 300 U.S. cities. Meanwhile, Newark, New Jersey; Paterson, New Jersey; and Detroit, Michigan, were among the worst performing according to WalletHub.

Rebound in Sight? 

Even with improved cost of capital, it may take some time for transactions to bounce back up from the REIT side, according to Bill Kauffman, a senior research analysts with NIC.

“In addition to a bounce back in premium since the first-quarter turmoil, the public REITs were not affected [by the Brexit vote] on June 24 to the same degree as the rest of the stock market, which is a positive for their investors and potentially for their deal-making going forward,” Kauffman wrote in a recent blog post. “And in fact, we already have started to see a little pickup in the third quarter. But we will have to see how the next few months play out as there is usually a lag between changes in the cost of capital and actual deal closing for the time period.”

Others agree that even with a recapture of capital advantage, REITs aren’t really being aggressive in terms of new deals, except for a few recent outliers. Ventas recently announced a $1.5 billion acquisition in the life sciences sector, while Welltower inked a $1.15 billion seniors housing portfolio acquisition on the West Coast.

“The REITs have seen a pretty significant improvement in their share prices this year, and that’s directly tied to their cost of capital,” Michael Knott, director of U.S. REIT research with real estate investment firm Green Street Advisors, told SHN. “In theory, it should have increased their interest in returning to being more aggressive acquirers. But interestingly, you haven’t seen that as much; you’ve seen a reasonable discipline by REITs.”****



Events (2016)

  • Gill Group plans to attend the Council for Affordable Rural Housing’s Quarterly Board and Congressional Meeting September 19th – 21st in Washington, DC.
  • Cash Gill plans to attend the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting September 13th – 14th in Jefferson City, MO.
  • Gill Group attended THDA’s Annual QAP Meeting August 9th in Austin, TX.
  • Gill Group attended AHAIN’s Buyer/Seller Conference August 1st – 2nd in French Lick, IN.
    • Cash Gill spoke on two panels: “Appraisals and CNAs” and “Pulling it All Together”
  • Gill Group attended NH&RA’s Summer Institute July 20th in Martha’s Vineyard, MA.
  • Gill Group attended NCSHA’s Housing Credit Connect Conference June 13th – 16th in Seattle, WA.
    • Cash Gill spoke on a panel entitled “Rural and Native American Development Strategies” with Bryan Hooper (Deputy Administrator of Multifamily Housing at Rural Development), Joline Kline (Executive Director of the North Dakota Housing Finance Agency), Don Beaty (The Summit Group), and Elizabeth Glynn (CEO of Travois).
  • Gill Group attended CARH’s Mid-Year Meeting and Conference June 12th – 13th in Washington, DC.
  • Gill Group attended NH&RA’s Spring Developer’s Conference May 16th – 18th in Marina del Ray, CA.
  • Gill Group attended PHADA Annual Conference and Exhibition May 22nd – 24th in Las Vegas, NV.
  • Gill Group attended Texas NAHRO’s 40th Annual Conference and Tradeshow April 19th – 21st in Houston, TX.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting March 22nd in Jefferson City, MO.
  • Gill Group attended Bank of Advance’s Annual Meeting March 17th – 20th in Norfork, AR.
  • Gill Group attended the Maco Companies’ Annual Meeting March 10th – 13th in Biloxi, MS.
  • Gill Group attended the Council for Affordable Rural Housing’s Quarterly Board Meeting March 4th – 5th in Washington, DC.
  • Gill Group attended the National Housing and Rehabilitation Association’s Annual Meeting February 24th – 27th in West Palm Beach, Florida.
  • Gill Group attended the Council for Affordable Rural Housing’s Midyear Meeting January 25th – 27th in San Antonio, Texas.

Events (2015)

  • In 2015, Gill Group attended over 50 meetings and conferences from California to New York, and just about everyone in between.

GROWTH (2015 - Highlights):

  • Gill Group added two offices in Michigan and one in Wisconsin, further expanding our staff of architects and engineers.
  • Gill Group and Greystone formed a Joint Venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions. Gill Group and Greystone are utilizing each of our areas of expertise in a collaborative effort, with a mission to partner with PHAs across the nation in preserving and expanding the affordable housing inventory under the HUD RAD program. Our team fully understands the intricacies of the real estate and affordable housing industries, and our services are provided by professionals who are fully immersed in LIHTC executions, construction management, project accounting, regulatory compliance, real estate transactions, and opportunity development. We sit on national and state boards and have in-depth knowledge of industry trends and best practices. As a developer team, we operate as three individual entities, each with a unique set of previous transaction experiences that add value to the project at hand. As a collaborative unit, we draw upon those experiences to bring to the table creativity, fresh ideas and unsurpassable development advisory services.
  • Gill Group’s subsidiary, National Title & Escrow, added two new offices in Missouri and Arkansas, further expanding our ability to service our nationwide base of customers.

Events (2014)

  • Gill Group attended 40+ meetings and conferences throughout the United States in 2014.

GROWTH (2014 - Highlights):

  • Gill Group began the process of working with owners of affordable housing to develop a web-based program that will work hand-in-hand with our services. It will give the users of our appraisals, market studies, capital needs assessments and many other services easy access and real time usage.
  • Gill Group added 2 offices with appraisers, market analysts, engineers and architects.
    • Within the offices are 11 architects, one MAI appraiser, one general certified appraiser, four market analysts and 12 additional support staff. 

Events (2013)

  • Gill Group attended 22 conferences and meetings throughout the United States in 2013

GROWTH (2013 - Highlights):

  • Gill Group expanded our cutting-edge market analysis software and added our own in-house developed needs assessment software for CNAs, PNAs, PCNAs, PCAs, RPCAs, and every other acronym for this type of service. 
  • Gill Group added 4 offices with appraisers, market analysts, engineers and architects.
    • Within the offices are three architects, one MAI appraiser, two general certified appraisers, five market analysts and 10 additional support staff. 
  • Gill Group expanded the footprint of its subsidiary, National Title & Escrow, to cover the entire United States with a local presence.

Events (2012)

  • Gill Group attended 20 conferences and meetings throughout the United States in 2012

GROWTH (2012 - Highlights):

  • Gill Group developed cutting-edge market analysis software that will allow us to do preliminary analysis that is subject-specific in any market in the United States within minutes. 
  • Gill Group added 11 offices with appraisers, market analysts, engineers and architects.
    • The offices now employ an additional 34 people.
  • Gill Group expanded coverage of its subsidiary, National Title & Escrow, to cover the entire United States.
  • Gill Group expanded coverage of its subsidiary, Gill Insurance Group, to cover the entire United States.

  Gill Group has published the following:

  • New York Real Estate Journal - How can low-income housing facilities translate into high profits?
  • New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
  • Tax Credit Advisor - Boston MSA Market Snapshot
  • Tax Credit Advisor - Seattle MSA Market Snapshot
  • Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
  • Affordable Housing Finance – Urban and Rural Market Studies.
  • Tax Credit Advisor – LIHTC Appraisals 101

Cash Gill, MAI has had the opportunity to speak on the following topics:

  • (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
  • (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
  • (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
  • (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
  • (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
  • (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
  • (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
  • (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
  • (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
  • (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
  • (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
  • (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
  • (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
  • (Chicago, IL) AHF Live – Strategies for Rural Deals.
  • (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
  • (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
  • (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
  • (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
  • (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
  • (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
  • (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
  • (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
  • (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
  •  (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
  • (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
  • (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
  • (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
  • (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities (2014)
  • (St. Pete Beach, FL) CARH – Preservation Challenges and Opportunities
  • (Nashville, TN) TAHRA – Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for LIHTC and RAD Transactions
  • (Los Angeles, CA) NCSHA – Successful Development in Challenging Markets
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities
  • (Seattle, WA) NCSHA – Rural and Native American Development Strategies
  • (French Lick, IN) AHAIN – Appraisals and CNAs
  • (French Lick, IN) AHAIN – Pulling it All Together





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