Multi-Family Market Update June 2020

June 18, 2020

The multi-family real estate asset class has held up well during this COVID-19 pandemic. It is still a favorite asset class among the various lending groups, as well as investors. The following is a summary of how the major lender classifications are currently looking at multi-family financing.

Insurance Companies

  • Most insurance companies continue to be underweighted in apartments.
  • Low leveraged high-quality properties are attracting the most aggressive rates (as low as 2.75% for 10-year-fixed money). Most life insurance companies are targeting LTV below 60% and the lowest rates are reserved for LTVs under 50% on A and most B quality assets. Loan size target for best-in-class pricing will be north of $3,000,000.
  • Long-term fixed durations, up to 30 years.
  • Loan amounts as low as $1,000,000 available, but larger and lower LTV requests bring best-in-class terms.
  • Interest-only available predicated on leverage, but more scrutiny on higher LTV and cash out requests.
  • In some rare cases, insurance companies are taking principal and interest reserves at close. This is new with the COVID-19 market disruptions.


  • Banks continue to provide competitive short-term loans (floating, 3, 5, 7, and 10 years). Best-in-class pricing, however, is rooted in banks providing interest rate SWAP pricing. This can be problematic for some investors. Make sure to read the fine print on those SWAP contracts.
  • Minimum loan amounts are as low as $500,000.
  • Depending on the transaction, bank LTVs can get up to 65%.
  • LTV requirements have become more conservative during this pandemic.
  • Banks utilize flexible prepays and inexpensive execution to attract multi-family borrowers to their product.
  • Banks have been reluctant to provide cash out, but over the last week we have seen an increase in availability.
  • Many banks are requiring principal and interest reserves during this period. In some cases, these reserves are being waived with depository relationship or lower LTV.


  • Agencies use interest-only options and loan amounts up to 70-75% LTV to appeal to borrowers in the multi-family space.
  • LTVs, although more conservative due to COVID-19, have shown signs of increasing as debt service reserve requirements have been reduced.
  • Low-cost small balance Freddie and Fannie programs available for deals under $7,000,000.
  • Non-recourse, fixed-rate terms from 3-30 years.
  • The approval and closing process can be demanding, as lenders have governmental oversight.
  • Able to lend in secondary and tertiary locations.
  • 10-year fixed interest rates are at historic lows, ranging from 2.50% to 3.50% (LTV/DCR dictated).
  • Agency lenders’ reserves are still in a state of flux. Most moderate-to-higher LTV (60% – 75%) borrower requests will have 6-12 months required debt service reserves, while sub 60% will be faced with less severe or no reserve requirements.


  • After melting down in mid-March, the CMBS market is reviving. CMBS lenders are currently quoting, closing, and securitizing loans again.
  • Leverage up to 70% LTV.
  • Defeasance or yield maintenance prepayment penalties.
  • Non-recourse execution.
  • Loan amounts are typically $5,000,000 and up.
  • Interest rates range from 3.0-4.15%, depending upon loan size, quality, property type, and tenancy.
  • Full-term-interest-only available.
  • Focus is on multi-tenant industrial, storage, anchored retail, single-tenant net lease with long term lease and credit, strong multi-tenant office and case-by-case unanchored retail with strong history.

As always, you can contact us for help with navigating the right kind of lender for your multi-family lending needs.