Multifamily finance sees improving investment conditions
The government-sponsored enterprise’s Multifamily Apartment Investment Market Index accelerated 8.7% quarter over quarter to a reading of 112.5, improving from 103.5, which reflected a 4% decline in the previous report. The index also increased 8.1% annually, outpacing the 3.9% gain in the fourth quarter.
Freddie Mac’s AIMI measures multifamily investment conditions based on mortgage rates, rental income and property price growth. Researchers at the GSE found improvement in all 25 markets across the country that it tracked.
“A decline in property prices and interest rates contributed to the AIMI’s strong start in the first quarter of the year,” said Sara Hoffmann, director of multifamily research at Freddie Mac.
“The rising index across the board this quarter is especially notable and was aided by the largest quarterly decline in mortgage rates since 2010.”
Multifamily investors saw rates fall from 6.5% to 5.9% over the quarter, as signs emerged of moderating economic growth and slowing inflation at the end of 2023. By comparison, volatility for much of last year eventually pushed interest rates almost 70 basis points higher and led index readings to decline over the final three quarters of 2023. By the fourth quarter, the AIMI came in lower for all 25 markets measured.
The latest index report, though, does not capture the rapid re-acceleration of interest rates that occurred beginning in April 2024 that has since moderated.
The report of more favorable financing conditions comes as leading investment entity Blackstone Mortgage Trust announced an agreement this week with M&T Realty Capital Corp., opening up access to Freddie Mac and Fannie Mae multifamily financing through the latter company’s originations unit.
The new partnership will establish a dedicated team to assist Blackstone’s borrowers with multifamily property transactions involving GSE products.
“The partnership with M&T enhances the range of capital solutions we can provide to our borrowers,” said Blackstone Mortgage Trust CEO Katie Keenan. “We are thrilled to have access to the agency multifamily lending market through M&T’s established team and business.”
The new deal also reflects M&T’s commercial real estate “strategy of expanding our customer base and growing our national multifamily lending platform,” said the firm’s CEO Michael Edelman. The company is a subsidiary
Apartment prices dropped across all cities Freddie Mac tracked in the first quarter. Chicago saw the smallest decline over the three months of 0.4%, while Denver experienced the biggest fall of 3.8%. Among the cities in between were New York, Los Angeles and Houston, with decreases of 0.8%, 1.4% and 1.8%, respectively.
