Finkelstein Timberger East Real Estate has received a $ 186 million refinancing program for 16 multi-family properties in the Bronx.
Fannie Mae provided the financing, which has an average fixed rate of 2.98% for 12 years with partial interest payments, followed by 30-year amortization plans. Black Bear Capital Partners negotiated the transaction for the borrower.
The buildings are located throughout the borough, in areas such as Jerome Park, Woodlawn and Grand Concourse. All the apartments in the portfolio are at stabilized rents. The new funding replaces the maturing New York Community Bank and Signature Bank loans.
Like many multifamily sector, rental collection in the 16 buildings has remained stable despite the economic turmoil of recent months. After dropping to 80% in April and May, rent collection rebounded to pre-pandemic levels of 95%.
In New York, the stabilized rent multi-family market has been in shock since June 2019, when new rent laws amended investment prospects. But this refinancing plan may chart a course for multi-family homeowners looking to refinance their assets – at least for those whose initial strategy was conservative.
Bryan Manz, senior managing director of Black Bear Asset Management, the broker’s parent company, said a property tax cut and federally subsidized rents worked in the borrower’s favor. Finkelstein Timberger also qualified for more favorable financing terms from Fannie Mae through an energy efficiency incentive program, by installing solar panels on properties. The solar project also allows the owner to sell excess energy back to the grid.
The most important factor in Finkelstein Timberger’s favor, however, is its long-term strategy. The company never planned to deregulate apartments, which is no longer tenable under current regulations. Some landlords who have received financing based on future rent increases have already at fault.
“[Finkelstein Timberger] has owned these properties since 1978, and they know the cold rules, ”Manz said. “In this case, they plan to operate the apartments as stabilized rents.”
If the operator had wanted to deregulate apartments, lenders would likely have an extra layer of due diligence, Manz said. Since June 2019, assessing the potential risk of fines for violation of the rent law has become a integral part multi-family underwriting in New York.
Lending agencies – quasi-federal entities Fannie Mae and Freddie Mac – have maintained a sustained pace of affordable property refinancing during the pandemic, and this trend is expected to continue in 2021. The Federal Housing Finance Agency in November Posted 2021 guidelines for both entities, requiring 50% of the $ 140 billion loan cap to be spent on financing affordable housing.