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Welcome Chad to the real estate shop. Appreciate you coming on to give us an update on the debt market from the agency side of affordable housing.
Before we jump in, I just want to kind of do some context for the younger kids that are out there that are listening. You know, Chad and I, we actually hooked up at a conference, man. I want to say it was 2018 in Miami.
And, you know, the moral of the story is, you know, you make that one meeting and stay in touch, you know, with the brother over the years, you know, been trying to do some deals.
Your podcast wasn't even on the table. So now, you know, Kerber and I have a podcast and lo and behold, bam, here's Chad. So, you know, word to the wise, you know, when you work these connections, man, just stay in touch because you never know where it's going to take you to.
But just to get started, Chad, how did you get started in the industry and what was your background?
Yeah, I appreciate it, Steve. Thanks for having me. And yeah, man, you kind of took me through a little walk down memory lane.
Yeah, I remember that conference. It was actually, I think, at the Pelican at the restaurant on the water there. So, we connected.
Well, yeah, no. So look, I got my start in the business back in 2011. You know, I can tell people, I mean, it really, you know, I think it really took a downturn, right, for an industry that had been kind of red hot running for so long, right, through the, you know, early mid 2000s kind of post the dot com bubble.
And then obviously running up to, you know, the Great Recession of 08. You know, I was in New York. I had finished up school at Columbia and I was working down on Wall Street and kind of in the equity research space.
And, you know, I had a close friend and fraternity brother who knew someone at what was, you know, then my former shop, Centerline Capital Group. And, you know, I've been kind of looking for some ways to get into the real estate and structural real estate finance world.
In particular, you know, in particular, kind of the multifamily space and Centerline happened to be an agency lender and you know got connected with someone in HR, who happened to actually be a black woman and so she was very helpful and instrumental and kind of pushing my resume, you know, internally and pushing for me to, you know, get an opportunity just to interview.
And I think roughly about seven or eight interviews later. I actually ended up securing a position. So started in New York as an analyst cut my teeth in the agency world and, you know, just kind of work my way up the food chain.
And, you know, saw that company go through several iterations of the acquisitions and my travels took me from New York to coming down to Miami to help launch an office for, you know, the next kind of parent firm that had owned the company and, you know, staying with them until
recently until last year, where I made a move and now sit at my current firm at MIT Road to Capital Corp. And I run Florida and kind of southeast expansion for the, for the agency and mortgage banking business.
Nice.
So tell us, like, what type of work you do. I know for the benefit our folks of course I know that you're in the debt space, heavily involved with the agency loans but kind of walk us through, you know exactly is what you do on a day to day basis how you find clients
and that type of stuff.
Yeah, yeah so on the most basic level my role is is like you said to originate debt for the agencies and the agencies are Fannie Freddie and hunts so what that means is is simply, I am you know going out and sourcing potential deals where we can provide the
debtor loan, mainly in the multifamily space, and that is you know across portable housing market rate, and the agencies also play and you know the senior housing space manufacturer housing student housing, etc.
So yeah essentially my job is to develop those relationships, whether they be, you know, folks who kind of gotten in the business and they're going a little bit and you know may not be the largest borrower to, you know, the high network individuals,
all the way up to the institutions who want to day to day, develop own operate, you know multifamily across the country.
And just to show you how small world is curving jump in and you've had your own relationship with with Chad, you know being the market study guy.
Kind of let everybody know how you and Chad hooked up as well, just to give folks a broader sense of how close to tight niche, this industry really is a chat at a conference as well I think was NHNRA in in Florida at the breakers.
I mean, you know we exchanged emails prior to that. We talked about some deals, but never met in person so and Chad lives in Miami, and I said hey, would you happen to go into this, this conference and he said yeah I'll be there I got a lot of stuff going on
and I'll pop in and I got some meetings lined up already at the conference so let's do it so we, you know we both met at the event and I had a chance to connect and you know our, we still talk, probably on a regular basis.
And I'm talking now about deal flow and things he's seen in the market and things I'm seeing so you know it's been amazing to see how how both of us have kind of grown since that conference and, and we talked about stuff beyond business like we talked about managing
a household, you know, Chad has three, three kids I've got a young daughter and and working on a second now so you know it's it's grown beyond just a business, so it's beautiful to see.
Absolutely. And now Steve I had one quick further point to that real quick, Kervin's exactly right, and you know even for the introductions that you know we made for one another, you know still talk to folks from, you know potential sponsors he's introduced,
you know I know some of the folks I'm introduced to him. And even on top of that, you know currently your business partner is an old colleague of mine as well, from my first shop, you know in the business from that that firm, Senolon.
So I think, yes, you know, it lends itself to say that you know good people in this business definitely tend to stick together. And I think again Steve to your earlier point of, you know, just how small of a business, it is as well.
Exactly, because the crazy thing is, like Kervin's other business partner at the time was a client of mine when I was back at the resident group in early 2000 so he told me that he kind of connected with her and she's a partner, you know in a
very test credit space, I was like, this is really crazy. So it's a really really tight space.
One of the things that we do this podcast, Chad, to give folks who are aspiring to be, you know, developers are getting to the business.
So a little insight from developers and professionals. From your aspect, I know you deal a lot with sponsors so you're on top of the whole underwriting. You know, what do you see as the challenges to some of the smaller folks who are trying to get into
business I mean obviously we know that sometimes we'll have to join venture with a larger firm to overcome those challenges, but you sitting on the debt side.
You know, what do you see the challenges are for folks who are trying to break in.
Yeah, no absolutely man I mean listen I think it's, you know, the main hot topic that has been for some time and I think will always, or now, I mean look we hope it's not always what I but I think that will persist for some time is always access
to cap.
Right. You look at, you know, sponsors who have been successful in this business. Typically, they have, if we're talking about on the development side right they typically have acquired a development side at a great basis.
And what do you need to do in order to acquire that development side of the great basis, right, typically, you've bought the land all cash, or you may have some low lever financing on it.
And you had access to that capital, whether it be debt or equity. In order to, you know, act quickly and act appropriately right there's one thing to be able to, you know, buy whether it's land or, you know, even an existing building, but it's having
capital that is not only available to you, but also a creative to the business overall right and what do I mean by that is that it's not, you know, overly expensive expensive capital or capital that's not flexible and doesn't allow you to be nimble in the
business right and that's the development front and you know even on the on the acquisition standpoint.
It's the same thing. Right, if you're going to buy an existing building, you know, typically you're getting some type of loan from someone like me who's going to do, you know, the first mortgage to senior debt.
Right, and then you've got to come to the table with equity.
And one of the other responses of color it's, you know, having the equity to be able to write that check.
Right, so or having access to good partners who will be able to help you write that check. And oftentimes, you know those same sponsors who like that access to you know that capital and flexible capital.
You know, need someone who's going to be able to sign on the loan guarantees. Right, because we have network and liquidity requirements for our deals.
So I think it's the you know the intersection of those two things which I think is has been the most prohibitive.
You know, historically speaking.
Got it.
I think it's important to think about multifamily buildings that are being financed with low income housing tax credits and you know obviously we've got the 9% ones that are competitive.
When it comes to you.
How do you kind of guide them through, you know, you might be better off doing a hoodlum or Fanny product or Freddie product.
How do you get them to that point, what's the right product for them.
I mean look I think it's really about understanding, you know, what you're looking to get out of the deal in the transaction. Right. Are you looking to get a deal done that's going to be developed you're going to sell that development, typically that isn't
going to be a case right with affordable housing and I always like to open it up to because the agencies, we refer to the agencies to your point Steve we're referring to, you know, Fanny and Freddie and hood are really pushing what we call mission driven business
and that's where the rents at these properties are, you know, at 80% of the area median income or less right we know, traditionally, an affordable project typically has what's called a set aside or units that are set aside.
Right. Typically it's been 40% of the project at 60% am I less or, you know, 20% at 50, etc and now we're you know pushing up to 80.
So looking at the deal, like I said, if this sponsor is looking for, you know, the highest possible leverage they can get, then yeah maybe it's one of our forward agency products right though, potentially under right to leverage up to 90% with a lower
leverage, or what you have today where we're interest rates have gone typically you're not getting to that, you know that higher leverage.
In addition to that you know you have the HUD product right which is oftentimes a longer term but also in some instances allows you to get a lot longer amortization.
So you know Fannie and Freddie now, you know Fannie and Freddie has been open to looking at longer amortizations, but with the HUD product it's, you know, it's typically programmatic, right, if you build a deal with what's called the HUD 221D4, you know it's
it's why I tell me it's a 40, you know, 42 year term essentially right a construction period with a permanent term. And so, you know, you also have a 40 year amortization with that. And what does that mean that just simply means that, you know, the payment you
got to make on the loan is going to be lower than if you had a, you know, call it a 35 or 30 year or even, you know, in some instances a 25 year amortization, right and and that all goes to benefit your bottom line when you're underwriting the deal because,
again, back to what you want to get out of it. It also depends on your capital partners, right, what type of returns do you need to deliver to them. Is this a deal like I said that you're going to hold, you know, for the next 15 years through a compliance
period or is it a, you know, a workforce deal that you bought and you know you need to exit the deal in five to seven years. So I think it's really understanding, you know, the return profile and what you have to accomplish with the deal, which then will dictate
what products that we look at.
And the time to close.
Yeah, time to time closes is definitely important as well you know Fannie free deals I mean we like to say, you know, a standard kind of 45 to 60 day close.
You know, deals typically take a little longer to close right. If it's you know, development deal you could be looking at, you know, a 12 plus month timeline, 12 to 15 months if it's a refinance scenario, you know you may be in that four to six month range.
Yeah, and to your point, your point, Kervin I mean it just really again kind of depends on that business plan and how you need to execute.
Have you guys made any changes because of the current environment to how you're looking at the market and looking at bars.
Look man we're you know we're obviously doing our best I mean, right now with the current environment I think, you know, a lot of the deals are being driven by again kind of those metrics I mentioned right deals that have what we call fire affordability, right,
not necessarily that they're, you know, a lie tech or tax credit project right, it can be a project that has, you know, running restrictions where project based have contract or, you know, a sponsor could be coming in to, you know, buy a workforce market rate project
and they're going to take you, you know, into a deeper affordable scenario where, you know, they're going to look for some tax abatement etc. to basically, you know, increase the returns on the deal.
And so, you know, we are out pushing for best terms for sponsors and I mean listen I'm working on a deal right now, where they've got some, you know, voucher tenants at the property, and we're trying to get a 35 year amortization versus a typical 30 year amortization
for a workforce deal. Right, so, you know, we're pushing where we can we're trying to, you know, get longer interest only when deals are coming in at lower leverage.
You know, for those forward committed loans that we're doing what that means is, you know, someone goes out they get an allocation of credits and they're going to build a lie tech project, you know, we have a forward commitment loan product that will essentially
be locked simultaneously which are construction loans. So, you know, trying to be number where we can there too like I said pushing for that longer amortization, etc.
Yeah, but I mean in today's climate man it's really just about being, you know, prudent and underwriting, and, you know, trying to push where we can.
Any changes in the liquidity requirement at all. Much people have to come to the table.
I mean for the for the most part it has been status quo.
You know, we are trying to, you know, mitigate. I'll say where someone may have a slight shortfall we're trying to, you know, mitigate that we're structuring the deal.
You know, but as far as kind of, I guess, for lack of better words, what's in black and white in the guy right has not changed. But, you know, we are trying to be helpful where we can, I mean look you know Steve and I were talking about another
project that we're working on where, you know, a sponsor was working on having, you know, the potential tax credit equity partner sign on a deal and let me listen, you know that sponsor that meet the typical requirements but you know we were trying to be,
you know, helpful in the sense of saying hey, you know, kind of given the experience level here and if they successfully executed on some projects that you know me we'd be willing to lean in right on a construction loan that was kind of, you know, it was,
it was in our footprint the sponsor was in our footprint right as a bank.
While we didn't have a tax credit equity need in that particular market, because it wasn't footprint, we were, you know, trying to be reasonable and be open to say look, if you elect to take this you know forward committed product with our construction
loan and we know that we don't have an open ended construction loan with some of the other things that went along with the deal right like there was a developer opportunity fund that was going to help with some liquidity shortfall during the construction period etc.
Like I said the tax credit investor was going to sign on the deal. So, you know, we want to say hey yeah you know we will kind of stretch a little bit here for construction, and in an effort to help capitalize the transaction.
But it's really kind of been kind of, you know, I guess in summary and in short, there's no programmatic or, you know, here is the box that we're, you know, we have said yeah this is where we're going to kind of change our requirements is really just kind of taking
a realistic approach and looking at every deal on a one off basis to say, hey, let's kind of sit down and be thoughtful about this and really kind of understand demand drivers in the market etc and you know, do we think this is a valuable product project
if we're going to lean in a little bit.
Okay, sounds good.
And you've been through a number of cycles before in the industry.
Do you see developers, maybe looking at secondary market treasury markets, given the current environment to sustain their business, what changes are you seeing or you expect to, you know, you've seen in the past.
I mean look this kind of really kind of first cycle right I mean we had a very long expansion with this last cycle right call it from kind of downturn from, you know, oh, no, no, and I got the business in 2011.
And I mean what I can say is you know having seen it really kind of come full circle.
And to your point, yes, absolutely I've seen sponsors that have, you know, moved into secondary tertiary markets right where they, you know, see value I was like I was just talking to somebody about a deal in Greer, South Carolina.
You know, the holiday right, um, you know and markets that historically have not, you know, come up and you know you've seen the emergence of, you know, other markets kind of moved to the forefront between you know Nashville and Tennessee and obviously
you know South Carolina's of you know gotten a lot of attention of late and you know obviously Texas and Florida's has been there but what I would I remind people to a lot is that, you know, as hot as Florida is and you know people focus on it.
here to Florida in 2014, right? Prior to that, the agencies had not allowed us to extend credit
on a programmatic basis over 65% leverage, right? Because of the historical kind of boom and bust
in Florida. So, you know, that's recent, right? Like eight, nine years ago, when you think about
how long, you know, we've been in this business and folks have been doing business. So even
oftentimes I have to remind people that, you know, you have a lot of projects in Florida that are,
you know, just going to start to cycle because, you know, kind of the requirements and lending
levels change for Florida. And then to the, you know, to your other point, I mean, yeah,
with developers, I mean, I think it's about, you know, costs, right? Land costs have, you know,
been driven up in a lot of markets. I mean, especially we've seen it here in Florida,
but even others throughout the country. So it really kind of, you know, comes to a point
where you have to say, okay, you know, what does replacement cost look like? Does it make more sense
to acquire an existing asset versus develop? And then I think on the opposite spectrum of that,
and kind of something that, you know, we see a lot and have to advise sponsors on is that,
you know, as borrowers are chasing yield, oftentimes what that means as well is that
you've got to look for older product, right? So you have sponsors that are chasing, you know,
70s, 60s vintage product, because I think, you know, kind of 80s and early 90s have been the
focus a little bit more, but, you know, 90s didn't need as much, and it was still kind of
expensive for some time. So when you're chasing 60 and 70s, you know, vintage product, typically
you're going to have very large capex budgets, right? We're talking north to 20, 25,000, you
know, adored. So, you know, sponsors are having to make a business decision to say, is it worth,
you know, chasing that product? Or yes, do I just go look at, you know, listen, is it applying to an
RFP? Or is it just, you know, finding a site and chasing competitive credits, 9%? Or, you know,
do we just kind of buy right, take 4% and see how we can make a deal work by getting, you know,
other incentives from the state or local municipality, et cetera. So, yeah, I think
there's a lot more thought and underwriting that has to go into business plans and deals today,
right, to be sound. And I think that will continue for a little bit,
right, as we navigate the volatility in the market. I know Kerber, network,
net worth and liquidity requirements, and I know that kind of varies on a deal-by-deal basis,
but it's a common question that we get from folks who are trying to really break in. Is there a rule
of thumb for net worth and liquidity? I know it's case by case, but is there like a generality that
you can apply when you're looking at sponsors? Yeah, I mean, look, the general rule of thumb,
right, is typically you want a net worth equal to the loan amount and a post-closing liquidity,
right, so not assuming that they're going to cash out on some other deal and add it, like,
kind of post-closing liquidity of 10%. You know, so net worth equal to the loan amount,
post-closing 10%. I mean, listen, there are some exceptions, right? I mean, we have instances where
you have, you know, nonprofits who are in the business of operating on real estate and have
great track records, and, you know, everyone here I think knows that typically nonprofits
operate at some slim margins sometimes and slim budgets, so they may not meet that function,
and then that's where, you know, sometimes we've seen a tax credit investor sign on a deal as well,
or, you know, they've had a decent net worth and liquidity, and it may not be equivalent to the
loan or those metrics and where we have to, you know, kind of file and look for some type of
exception, but that said, I mean, you know, while we want to try to be helpful, I mean, we do look
for, you know, I would say, you know, a net worth and liquidity relative to the deal and that kind
of aligns with, you know, either their overall portfolio and leverage, right, like, we just,
we try to make the case holistically if they don't meet those exact requirements.
Chad, you mentioned the 1960s, 1970s product. Do you see a lot of developers now looking at,
like, historic tax credits and energy tax credits to support their capital stock?
To be honest with you, Kermit, I don't play a lot in the historic energy tax credit space.
I do know that sponsors are looking for those alternatives to fill the gap. Funny enough,
I was actually looking at a project here in Fort Myers, and they were looking at
historic on the project because there was some retail component, and it was a historic building,
like, I think a mill or something along those lines, and they wanted to kind of preserve
the facade and the building itself and then attach some multi to it on the side. So
I do know that sponsors are seeking those, you know, additional dollars, and I mean, listen,
we've seen the emergence of, you know, the PACE financing and the ground lease world. I mean,
what I would tell, you know, your listeners is that on a relative basis, a lot of,
aside from the historic tax credits, right, like, kind of the PACE and the ground re stuff and,
you know, things like that are just a little bit newer to the front, so don't be, you know,
frustrated when lenders kind of, you know, either dismiss projects because those, I know they look
like good avenues to help capitalize deals, and I think in some instances they are, and I think
as it just becomes more prevalent, I think we'll start to see it, you know, become a little more
constant in deals. You made a good point about C-PACE. I was almost not going to really talk
about it, but there is, you know, a little confusion that I was actually trying to clear up,
so this is relevant. Like, from what I understand, like HUD products won't use C-PACE. I believe
Fannie may not. I understand Freddie can, but they either need regulations, regulations are being
drafted, you know, but you got like a Naveen out there who's got billions of dollars of capital,
you know, ready to deploy for C-PACE. What are your thoughts on C-PACE? And, you know,
am I accurate that HUD doesn't use it, Fannie doesn't use it, but Freddie may?
Uh, I think you're pretty spot on, Steve. Well, I have heard that HUD has done a handful of deals,
and when I say handful, I'm literally referring to counting on one hand, and I think that number
has slightly grown, so I think they have. You're right, Fannie has not looked at PACE to my
knowledge, I'm at this standpoint, and yes, Freddie does have some guidance around it,
but again, just like I mentioned, I think, you know, it's always about adoption speed, right?
So yeah, Freddie, as far as I know, has not closed anything with PACE, and listen, I think it's a
bigger front, right? I know sponsors oftentimes get frustrated, because, you know, we've looked
at some PACE stuff, and to my knowledge, there were not my deals, I have not done them, but
I do know that M&T has done some loans where PACE has been in the senior stack on the construction
standpoint, but what I will tell you, what you're seeing, and I think you'll hear this from the
PACE folks as well, too, is that what you're seeing is that senior leverage is coming down
when the PACE is coming in, and or, you know, PACE can kind of be used to, you know, sell down
effectively on the deals, because of the fact that we do have to look to REFI, because the agencies,
you know, haven't become widely, you know, adopters of it yet, you've got to get that PACE out of
there, right? And listen, this is, you know, no talking points from M&T, you know, nothing from
NIMMA, I mean, kind of my own thoughts around it, right, is because we're talking about a big animal,
right, and when I say a big animal, we're talking about, you know, two groups, Fannie and Freddie,
that are, you know, doing 70-plus billion a year in financing with a model that's kind of been tried
and true, proven and tested, right, with securitization, you know, Freddie has his
K-Series, you know, Fannie securitizes deals one-off that are sold, so when you start talking about
something like a PACE that doesn't, for lack of better words, doesn't necessarily sit in front of
the senior, but it is being paid because it comes in like an assessment on the tax bill, right, like
you, there's a lot of regulation around that, and you know, like I said, you have structuring with
the securitization, there's probably ways it needs to be reported, so I think it's just, it's really
going to take some time for the, you know, the adaptation of it to the marketplace, so I would
just tell, you know, tell people to continue to get smart about it, you know, and build a knowledge
base around it, because I do think eventually it will become, you know, more widely used.
Got it, and then one last question from me, and I know Kermin has one more, in the industry itself,
both, you know, it's not probably particularly too affordable, but we're seeing a lot of
programs prop up for Black and Brown developers, I'm seeing it on the developer side where shops
like, you know, Enterprise will come in and they want to be a co-developer for, you know, an upstart
Black or Brown firm, we just did a podcast with NEF, and they have a program as well where they'll,
you know, backstop a guarantee. Do you see any of that going on in there with some of the depth
there in terms of programs targeted for Black and Brown developers?
Yeah, yeah man, definitely, definitely seeing, you know, folks make strides, you know, like I said,
we're, what we're doing, looking at deals, we're trying to do the same as well too.
You know, I have friends who have, you know, gone out and, you know, they kind of already had their
own shops where they raise funds, and they've been able to partner with, you know, some big names in
the industry, and or, you know, kind of family offices that have said, hey look, we want to be,
you know, impactful in a way that'll help you grow your business, and what is that, right? We need,
I use the pun since we've had gas shortages here in Florida, right? They need the gasoline behind
them, really, right? They've kind of built out the business, they've worked for, you know, some of
the most reputable names in the industry, right? When you're talking about, you know, large
acquisitions, you know, EQR and BlackRock, Blackstone Grow, etc. And so now they've kind of
gone on and launched these platforms, so we, you know, we are seeing some movement in that arena.
It seems like, you know, every now and then I'm seeing someone who's joined kind of an impact
capital, you know, either lending or equity shop, and look, I think like anything else, again, it
takes a very long time, you know, to put these things together, to develop a business plan,
to allocate the dollars, to create an execution around it, because at the end of the day, it's
still about ROE, right? It's return on what the equity is. So look, I would love to see us farther
along in the space. I think we're making good strides. I think, you know, it will continue
you to move. And I think, you know, folks like, you know, the real estate shop and, you know,
what you and Curran are doing, or, you know, being the beacons of light that have to continue
to put a spotlight where there is room for improvement, right? And there is the ability
to not only invest in, you know, BIPOC minority, to grow some other acronyms out there, but invest
in people, you know, who may not fit the typical status quo of being a portfolio manager, or
allocator, asset manager, and or developer sponsor, acquisition group, I'm trying to kind of capture
everything here. But, you know, we're seeing it, we're seeing them emerge. And I think we just have
to continue to, you know, make sure the conversation stays at the forefront, that it just, it doesn't
become something that, you know, just kind of becomes, you know, okay, the norm, or, hey,
we tried and we were not successful. Because we do know that real estate is a slow business,
and it takes time. So Curran, take it home, man. Appreciate it, Chad. Always good talking to you.
I think Curran's going to wrap us up. Yeah, for sure. Chad, I think this has been really,
really informative. Any last comments about the way you think the market's going to go,
given the current conditions, or any advice you have for borrowers that are looking for capital
right now? Yeah, I mean, look, the big thing that I will always say is, look, if you got a deal,
and the numbers work for you, close. Close your deal. Because if one thing, recent times,
haven't shown you is that, you know, we don't know what, you know, what happened, right? I mean,
yeah, the interest rate volatility is going to continue to persist in the market for a little bit.
I mean, listen, look, I wish I had the crystal ball. And candidly, I probably wouldn't be sitting
here talking to you. We might be doing this interview on my boat, because I would know
everything that was going to happen. And I probably would have picked the mega millions with the
mega plier long ago. But listen, close your deal if you got a deal that's in front of you.
Yes, rates are up. Historically, rates are not at a level that is going to be a big deal.
A level that is crazy. You know, more seasoned, older developers will tell you, hey, I was doing
deals, you know, when rates were 8, 9, 10%. Right? So while I understand that, you know, cost of
living is higher now, you know, cost of bill is higher now, etc. Listen, we can figure out how to
make this work. And, you know, understand that lenders and other folks, we're reactionary,
right? We have to react to the market and where it is in order to ensure that, you know,
we don't create the issues that do come with quantitative easing, right? And cheap capital,
I think everyone got accustomed to, you know, much lower rates and spreads. And listen, I think some
headwinds that we're going to face as, you know, many properties come up for refinance,
recapitalization, and there's going to be, you know, there's going to be some shortfalls there.
You know, anytime you have rates that, you know, have risen, you know, three, 400 basis points,
it's going to be challenging. Right? I was talking to somebody funny enough about this,
you know, the other day, you know, I started with M&T last July and, you know, rates, I think,
kind of on an agency front, especially in affordable housing space are probably overall 85 to 90 bips,
kind of for your typical kind of fixed capital markets, you know, seven, 10-year deal, right?
If you're just acquiring a deal and extending use period or something like that and just getting
your standard, you know, seven to 10-year loan. But that said, on the, you know, kind of structured
arm and adjustable rate mortgage front, you know, rates are up, you know, 400 basis points. You know,
we were doing seven-year arm deals at like, you know, three and a quarter. You know, today,
those same deals are pricing, you know, seven and a quarter and or higher. Right? So, yeah, rates are
up and we know what that means for values. They're going to need to come in as cap rates expand.
But, you know, bottom line, if you got an execution that works and it hits your deals and everyone's
happy, close your deal because you don't want to be the guy that's, you know, sitting next to me
saying, oh, man, well, you know, our next guy closed and, you know, he got a rate 50 bips cheaper
than meaning you wait two days later and you could have closed that X and now you close at a rate
that is, you know, 50 bips wider because there was some swing in the marketplace. So, you know,
I think we're going to face and sure, I think we're going to continue to face some headwinds
with interest rate volatility. I'm hoping that it will settle here soon, but obviously we got to
wait for the data to come out from the Fed and, you know, other smart folks that are doing a lot
of modeling. And I think once we have that, I do expect kind of the volume and velocity of business
to pick up, right? I mean, I, kind of the consensus that I've heard is that it's going to be on the,
you know, back half of the year and third and fourth quarter that they expect to see the
acquisition market open up a little bit, which I think in turn will, you know, make way for,
uh, for everything else, right? You know, less competition and folks who's trying to pivot to
develop me, change yield, et cetera. So, you know, I listen to the bottom line is we've always gotten
through it. We'll get through it. You know, we just got to stay the course and, and we know that,
you know, underwriting has been more sound, um, this time around, but there still remains to be,
you know, some distress when you've got rates that are, like I said, up, you know, 400 plus
basis points. So it remains to be seen, but I think everyone should just stay positive.
Another day at the shop, content they can't get anywhere else.