2019 Will Require Creativity, Flexibility, Discipline
Paul Woodworth, head of agency lending for SunTrust, believes a lot of focus will remain on multifamily in 2019, but that doesn’t mean that multifamily deals will be a piece of cake. Instead, he predicts some ingenuity will be required on the part of the lender in order to keep momentum strong following an active 2018.
What are the best ways lenders can work with developers to increase our nation’s affordable housing supply?
Woodworth: Lenders should play a consultative and collaborative role. A financial institution has a unique opportunity to leverage its public-private relationships, bringing an array of resources to the table, including foundations, as well as public and private subsidy sources. It is also critical for a lender to bring multiple solutions to fill the capital stack. This could include construction or bridge financing, LIHTC equity and permanent lending solutions. Furthermore, banks have a desire and an obligation to serve their communities. Active — and creative — participation in delivering quality affordable housing plays a critical role in the sustainability of the communities we serve.
Where is SunTrust’s sweet spot right now in terms of multifamily activity?
Woodworth: SunTrust’s sweet spot is primarily focused in affordable housing, conventional multifamily — primarily to long-term holders — and in the value-add space with moderate levels of rehab. The bank’s multifamily debt products, including construction, bridge, agency, etc., are delivered on a national basis. Our focus is primarily on loans $10 million and up, and $5 million and up in the affordable housing space.
Do you believe we will see more sustainable and/or green building activity in the multifamily sector in 2019?
Woodworth: I believe green building activity will continue to increase in ground-up new development activity. The ROI on incorporating green architecture continues to improve. This is seen in improved operating savings for developers, as well as savings for their tenants in the form of lower utility bills. Additionally, there are clearly environmental benefits, including conservation of natural resources and improved air and water quality. Tenants’ social awareness also plays a critical role in incenting developers to deliver green and sustainable housing.
Why is it so critical for lenders to remain flexible in today’s borrowing environment?
Woodworth: As borrowers look at a wider spectrum of investment opportunities, ranging from ground-up development to value-add opportunities, it is imperative that lenders be creative on the debt side. SunTrust has been active in marrying its balance sheet products with its various agency permanent loan solutions to meet these varied needs. SunTrust’s bridge program can assist borrowers who need a crafted solution to help finance a project repositioning. Our bridge capital has been made available in the affordable, manufactured housing and conventional spaces.
What advice would you give to a borrower who is in need of a flexible lending partner today? What advice would you give to lenders who have potential borrowers in need of flexibility today?
Woodworth: Borrowers need to work with a lender that is consultative and provides creative solutions. Choosing a lender that brings expertise with tailored solutions, as opposed to a lender that delivers a low-priced “off-the-shelf” commoditized product, is critical. It’s easy to find the cookie-cutter programs, but working with someone who has the ability to deliver multiple and customizable loan options may ultimately result in a better outcome for the borrower.