M&T Realty Capital Corporation enters 2022 with ambitious plans to increase its multifamily financings as part of an effort to double its home lending volume over the next two to three years. To achieve these goals, it relies on a new management structure and a recently announced strategic partnership with Marcus & Millichap Capital Corporation.
M&T Realty Capital, the commercial mortgage banking arm of M&T Bank, had lending volume of $5.1 billion in 2021, just below its high point of $5.2 billion in 2019, a said Michael Berman, CEO of M&T Realty Capital. Multi-family loans make up the lion’s share of financing, he adds, and the sector offers significant growth opportunity in the future.
“Multifamily is a hot industry right now – everyone is trying to invest in it,” he says. “It’s just an extraordinarily healthy asset class because of its supply and demand dynamics.”
Indeed, the US apartment market had a banner year in 2021 by all measures. Investment volume reached a record $335.3 billion, nearly 75% higher than the record volume of $193.1 billion recorded in 2019, according to commercial real estate brokerage firm CBRE.
Meanwhile, renters absorbed 617,500 apartments in 2021, another record, CBRE reports, and the year-end average apartment vacancy rate of 2.5% represented a drop of 2.2 points. percentage over 12 months earlier. These conditions, created in large part by a recovery in employment, wage growth and increasing household formation, helped to push net effective rents up 13.4% on average in the fourth quarter compared to the fourth quarter. last year.
To capitalize on this momentum – and to increase its real estate business portfolio overall – M&T Realty Capital promoted Mike Edelman to chairman in January. He joins Berman, who became CEO in April 2019, and Christine Chandler, Chief Operating Officer and Chief Credit Officer, in an effort to lead the organization to the next level of growth.
M&T Realty Capital continues to focus on serving M&T Bank balance sheet borrowers transitioning from construction or bridge loans to permanent debt – a source of $2.3 billion in lending volume in 2021. It also brings more life insurance companies and debt funds into its universe while increasing business with Fannie Mae, Freddie Mac, and the Housing and Urban Development Department (HUD).
Another key part of its strategy to increase volume is its strategic alliance with Marcus & Millichap’s financing arm, which specifically focuses on multi-family transactions of around $10 million or more, Edelman said.
The partnership, announced in October, combines Marcus & Millichap’s brokerage and multi-family origination capability with M&T Realty Capital’s access to agency financing and other sources of capital, according to comments from Marcus CEO & Millichap, Hessam Nadji, during the company’s third quarter earnings call. In three quarters of 2021, Marcus & Millichap closed $16 billion in apartment deals, it further told analysts. As part of the deal, Marcus & Millichap made a preferred stock investment in M&T Realty Capital.
“Leveraging the sales market through the Marcus & Millichap partnership is going to be a huge opportunity for us,” says Edelman. “We continue to see growth in demand for apartments from tenants as well as investors. And we believe this is an important way to take advantage of this market and increase the volume that we achieve each year. . »
Additionally, M&T Bank’s merger with People’s United Bank, pending regulatory approval, will help consolidate its traditional base in the Mid-Atlantic and New England. Yet the bank’s expansion into Florida and the Pacific Northwest in recent years, as well as its partnership with Marcus & Millichap, offers M&T Realty Capital the opportunity to increase its presence in these regions and expand into Texas, the Midwest and West, says Edelman.
“We expect a lot more business in the years to come,” he adds.
M&T Realty Capital is also ramping up its affordable housing business, Berman said, and has hired a dozen new people in the department over the past 20 months. In 2021, the mortgage bank provided nearly $1.8 billion in debt and $178 million in Low-Income Housing Tax Credit (LIHTC) to affordable housing developers.
“We are trying to significantly increase our volume of affordable housing and are working hand-in-hand with the bank to grow our presence nationally as well as in our Mid-Atlantic and Northeast footprint,” explains- he. “Affordable housing is at the heart of our mission.
Among other transactions, M&T Realty Capital played a pivotal role in financing Rye Street Residential, a 254-unit mixed-income apartment project under construction in the ambitious $5.5 billion, 235-acre redevelopment of Port Covington in Baltimore. M&T Bank provided a $73.5 million construction loan to Weller Development, and M&T Realty Capital arranged permanent financing through Freddie Mac’s targeted affordable housing solution Optigo, Chandler said. The complex deal also included $5 million in state tax credits for low-income earners, tax-exempt bonds and private funding.
“The bank has the advantage of knowing that permanent financing is already in place,” she adds. “It’s a holistic approach that we take when working with clients.”
The Rye Street project is part of Port Covington’s $650 million mixed-use first phase, which will include 1.1 million square feet of new residences, offices, retail and public spaces on the middle fork of the river. Patapsco. Funding for the phase includes $137.5 million in tax increment funding bonds and $154 million in Goldman Sachs opportunity zone funds.
— By Joe Gose. This article was written in association with M&T Realty Capital Corp., a content partner of REBusinessOnline. For more articles on M&T Realty Capital Corp. via sister publication Seniors Housing Business Click here
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