Outlook for Agency Lending in Multifamily Housing and Health Care

Vince Mejia:
Hi. Thank you for having me. It's a pleasure to be here.

EMS:
Absolutely. So to kick off the conversation, tell us a little about the firm and how you got to where you are today.

VM:
Sure, I'd be happy to. So Greystone is a private real estate finance and investment company, and we provide debt equity, investment sales, and loan servicing solutions. Greystone is number one HUD lender by firm commitments, and we're a top 10 agency lender, which means both Fannie and Freddie Mac. I joined Greystone last year as a senior vice president in our agency production group, which again deals with leading the growth of our products for both Fannie and Freddie Mac. And previous to Greystone, I worked at Fannie Mae for 10 years. During the 10 years, I was a director and oversaw many of the lending partnerships, including firms like Greystone, and I handled a lot of the negotiating, structuring of conventional and affordable multifamily loans.

EMS:
Vince, giving your focus on agency lending to both multifamily and healthcare, wanted to hear your overall outlook for this space.

VM:
Yes. I think agency space is in a strong position. As the year has progressed, we've seen agency loans regaining market share, and there's an anticipation that financing will be shifting away from smaller banks towards agency loans. A lot of the banking disruption that we saw at the earlier part of this year resulting in pullback in lending from small and regional banks. So we don't see that as any concern. Typically, agency loans represent about 58% of total multifamily loans origination. That has dropped about 40 to 45% over the last two years, but now the agencies are starting to bounce back, and the share of agency loans says the market share has risen up to 55%, which is up 10% year to date for 2023. Greystone, ourselves, we've seen a significant uptick in agency loan requests as well over the last two months, including some of the highest activity levels we've seen since 2021.

EMS:
And Vince, as a follow-up, where do you see some of the greatest opportunities, and why?

VM:
So obviously there's a lot of volatility in domestic and global economy the last couple of years, but multifamily is a great sector to be in. Shelter is always needed, people always need a place to live, and multifamily has performed well so far this year. Rents are stable. Occupancy rates have stabilized as well, and we think that there's great opportunity in multifamily. At Greystone, our application that are coming in are up 30% year over year. A lot of acquisitions and our refinances are up double compared to fourth quarter of last year. And that's a lot of drivers on that, anywhere from loan assumptions where people are assuming loans that have a low interest rate compared to a new loan that would have higher interest rate and investors just looking to capitalize and crystallize on liquidity.

EMS:
Vince, on the other hand, what are some of the greatest challenges you face, and why?

VM:
So despite strong demand and mitigating factors, multifamily is not immune to the same risk of other property types. Challenges are, what everyone hears, rising interest rates, inflation, possible economic recession. And though multifamily is typically recession-resistant, it's not recession-proof. So if a recession is deep enough to impact demand, especially with a lot of the supply coming on, it could hurt the multifamily market.

EMS:
Vince, to shift gears a bit, DEI is obviously a top of mind topic for the industry, and wanted to see how Greystone integrates it into the firm's culture.

VM:
Yes. So actually the tagline of Greystone is Where People Matter, and Greystone itself has a diversity officer. We have a DEI executive council, a DEI committee made up of people from across the company. Greystone's mission in the DEI space is to build belonging. And they do that through connecting colleagues with events, discussions, brave discussions, panels. But most of the DEI committee is made up of three subcommittees: culture, careers, and people in community. So these groups particularly focus on just embedding the DEI into the Greystone culture through recruitment, training, communication, events, and as well as giving back to the community through donations and mentoring.

EMS:
Vince, we've covered a lot of ground today and wanted to see what your future plans are for Greystone.

VM:
Yes. So Greystone's a very entrepreneurial company and we're always looking for different areas of expansion. Whether it's in a particular asset class, different product type, we're always looking to be opportunistic and serve the need of our clients. With interest rates rising, inverted yield curve, we're looking at more agency lending right now, and that's coming back fast and strong. So in that vein, we're trying to grow our teams and support this need and help grow our agency platform.

EMS:
Vince, I want to thank you so much for sharing your perspective with our listeners.

VM:
Well, thank you so much for having me.

EMS:
And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a list of other topics. Join us for our next EisnerAmper podcast when we get down to business.

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