The Last Mile of the Inflation Fight is Going to be Bumpy

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Last week’s inflation news wasn’t good. CPI rose 0.4% again in March, following the same in February, and 0.3% in January. Fearing that a June rate cut by the Fed is off the table and uncertain about the possibility of subsequent rate cuts this year, markets reacted strongly, pushing yields on the ten-year UST to 4.65% at this writing.

The last mile of the inflation fight is going to be bumpy.

For months, we have all been leaning into the hope and expectation of rate cuts this year. First, it was six cuts, then maybe four, and then three. Now, no one is sure, and the talk is again of “higher for longer.” Once again, it’s “Stay alive until ‘25”.

As difficult as it is – and as eager as we all are to get back to closing deals – we’ve made a lot of progress. Inflation has fallen dramatically over the past two years, from a high of 9.1% in June 2022 to an annual rate of 3.5% in March. The economy is growing, consumers are spending, and the trends are, for the most part, positive.

And yet, a positive economic outlook does not necessarily mean good things for CRE and multifamily. The ULI Real Estate Economic Forecast, presented at the ULI Spring Meeting in New York last week, reinforced that idea. The report includes a consensus view that rates are still likely to fall slowly to 4.0% this year and 3.75% next year, but inflationary pressures from things like investments in energy transition, geopolitical factors, continued labor shortages, and the federal deficit will mean that the path will be, well, bumpy.

Those of us in multifamily are, by nature, optimistic. We have to be optimistic in order to make long-term investments and take long-term risks, but we also tend to think that the way things are right now—in good times and bad—is the way they will always be. It just isn’t so.  

Here's to the last mile, lower rates, and deals that pencil. The day will come.

At AGM, we do our best to keep developers informed of proactive measures you can take to get the most from every deal. Please schedule a call if you have questions or want to discuss your next project. 

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Frank Grosch

Frank Grosch has over 34 years of experience in multifamily finance, development and operations in both for-profit and not-for-profit settings. Prior to joining AGM, Frank participated in the development, acquisition and financing of more than sixty affordable and market-rate multifamily projects with total capitalization exceeding $2.0 billion. He is an honors graduate of the University of Rochester and holds an MBA in finance from the Crummer School of Business at Rollins College in Winter Park, FL. He is the proud dad of two great kids, both in college.

Newsletter: April Pulse Check

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Last week’s inflation news wasn’t good. CPI rose 0.4% again in March, following the same in February, and 0.3% in January. Fearing that a June rate cut by the Fed is off the table and uncertain about the possibility of subsequent rate cuts this year, markets reacted strongly, pushing yields on the ten-year UST to 4.65% at this writing.

The last mile of the inflation fight is going to be bumpy.

Read more in the April Newsletter here.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Frank Grosch

Frank Grosch has over 34 years of experience in multifamily finance, development and operations in both for-profit and not-for-profit settings. Prior to joining AGM, Frank participated in the development, acquisition and financing of more than sixty affordable and market-rate multifamily projects with total capitalization exceeding $2.0 billion. He is an honors graduate of the University of Rochester and holds an MBA in finance from the Crummer School of Business at Rollins College in Winter Park, FL. He is the proud dad of two great kids, both in college.

Newsletter: March Pulse Check

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At the NAHB IBS meetings in Las Vegas earlier this month, insurance, insurance premiums, and retained risk were major topics of discussion among multifamily developers and owners.

And it is no wonder. Multifamily property rates have gone up every quarter for the past twenty-five quarters. Seventy-eight percent of apartment owners saw a greater than 10% increase in premiums from 2022 to 2023. One-third saw increases of 25% or more. Coverage that used to require three or four layers now routinely takes thirty or more. While pricing is said to be stabilizing, higher rates, driven by severe convective storms (think hurricanes and tornadoes) and $1 billion losses, are here to stay.

Read more in the March Newsletter here.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Should You Be FORTIFIED Against Retained Risk?

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At the NAHB IBS meetings in Las Vegas earlier this month, insurance, insurance premiums, and retained risk were major topics of discussion among multifamily developers and owners.

And it is no wonder. Multifamily property rates have gone up every quarter for the past twenty-five quarters. Seventy-eight percent of apartment owners saw a greater than 10% increase in premiums from 2022 to 2023. One-third saw increases of 25% or more. Coverage that used to require three or four layers now routinely takes thirty or more. While pricing is said to be stabilizing, higher rates, driven by severe convective storms (think hurricanes and tornadoes) and $1 billion losses, are here to stay.

Developers are responding by breaking up insured portfolios, placing coverage wherever they can find capacity, and retaining more risk in the form of much higher deductibles.

As presented by Alex Cary at IIBHS and Julie Shiyou-Woodard at Smart Home America at the NAHB IBS meetings, the Insurance Institute for Business & Home Safety (IBHS), a not-for-profit created and funded by the insurance industry, has developed the FORTIFIED program, including FORTIFIED Multifamily™. It is a voluntary construction and re-roofing approach designed to strengthen multifamily buildings against severe weather. The FORTIFIED Multifamily certification program helps building owners improve their multifamily structures’ ability to resist wind, water, and hail damage from tropical cyclones or convective storms.

There are three levels of certification – Fortified Roof, Fortified Silver, and Fortified Gold.

The Roof certification promises better roof performance against high wind and water penetration with things like stronger nailing patterns and sealed seams. Silver adds strengthened wall systems and openings. Gold includes a continuous load path from the roof to the ground. Studies suggest that FORTIFIED construction adds between 0.3% and 1.4% to the cost of construction. In coastal areas with the most stringent building codes, there may be little impact on cost beyond the small cost of certification.

So why pursue a FORTIFIED Multifamily certification?

FORTIFIED is too new to have had a real impact on insurance premiums. However, there is some suggestion that in times of limited coverage capacity, as we have experienced recently, FORTIFIED projects may find coverage where others don’t. There may also be some advantages in the market as renters learn the meaning of FORTIFIED construction.

It seems that the real reason to consider FORTIFIED is retained risk and higher deductibles, particularly for wind and named storms.

As owners take on more of the risk once covered by insurance, building better apartments that can withstand storm damage only makes sense. If a Fortified building sustains less damage and is back in service sooner than might otherwise be the case, owners will see lower out-of-pocket costs and less lost revenue.

The FORTIFIED approach to building has proven effective in Louisiana and other coastal areas, with FORTIFIED buildings performing exceptionally well in hurricane conditions.

Time will tell if developers adopt FORTIFIED or other building standards, as they and the insurance industry are forced to confront the reality of more severe convective storms and $1 billion in losses.

At AGM, we do our best to keep developers informed of proactive measures you can take to get the most from every deal. Please schedule a call if you have questions or want to discuss your next project. 

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Frank Grosch

Frank Grosch has over 34 years of experience in multifamily finance, development and operations in both for-profit and not-for-profit settings. Prior to joining AGM, Frank participated in the development, acquisition and financing of more than sixty affordable and market-rate multifamily projects with total capitalization exceeding $2.0 billion. He is an honors graduate of the University of Rochester and holds an MBA in finance from the Crummer School of Business at Rollins College in Winter Park, FL. He is the proud dad of two great kids, both in college.

Newsletter: February Pulse Check

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The era of free money is over. Developers are still adjusting.

If there was one clear message coming out of the 2024 NMHC Annual Meeting in San Diego last month, that was it. Everyone is still adjusting.

Read more in the February Newsletter here.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Joe Barsin

Illustrations by Joe Barsin are special because he combines a passion for history, culture and community with a deep seeded pride in America. Living abroad in Europe during his formative years developed his understanding of an artist’s role in defining a community’s culture and history. Being an Eagle Scout developed his sense of community, patriotism and appreciation for the natural world. Joe is a native of Akron, Ohio, who graduated from Kent State University with a degree in graphic design. He and his wife, Eva, started their own design firm, JEB Design, Inc., in 1998, and continue to work from home while raising their two boys.

AGM Financial Services donates $100,000 to Baltimore Nonprofit Organizations as part of its Annual “Give Back” Initiative

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BALTIMORE, Maryland, February 1, 2024 — For a fourth consecutive year, AGM Financial Services (AGM) donated a total of $100,000 to four Baltimore nonprofit organizations. Recipients received a $25,000 unrestricted grant allowing each organization to further its mission as it sees fit and for any legal purpose it chooses.

“As a Baltimore-based company, much of AGM’s success comes from right here at home,” says Myles Perkins, President & Owner. “The Donor Fund is simply a way for us to give back to the community that gave us our start over 30 years ago.”

Recipients of the 2023 grant donations include:

B & Dee’s Baltimore Love, Inc. is an inclusive, non-profit 501(c)3 that officially began in 2019. The organization is run solely by volunteers and organizations that donate money, food, clothing, toiletries, time, and talent. More than 1,500 volunteers and 20 organizations support B & Dee’s in serving over 10,000 meals each year. “On behalf of our Board of Directors and team of volunteers, I thank AGM Financial Services for their generous donation,” said Brian Dolbow, President of B & Dee’s. “This funding is going to make a tremendous difference in our efforts to support Baltimore’s most vulnerable communities and to make Baltimore a better place for everyone. Together we WILL make a difference!”

Health Care for the Homeless works to prevent and end homelessness for vulnerable individuals and families by providing quality, integrated health care and promoting access to affordable housing and sustainable incomes through direct service, advocacy, and community engagement.

Maryland Family Network was formed in 2009 with the merger of two leading nonprofit organizations — Maryland Committee for Children, founded in 1945 to advocate for high quality child care, and Friends of the Family, founded in 1986 to administer Maryland’s network of Family Support Centers. The organization’s mission is to ensure young children have strong families, quality early learning environments, and a champion for their interests.

Project Pneuma is a 501(c)(3) non-profit organization based in the heart of downtown Baltimore, MD. Its mission is to Breathe New Life holistically into the young men it serves by challenging them intellectually, strengthening them physically, nurturing them emotionally and uplifting them spiritually. Project Pneuma strives to teach young men the art of forgiveness, self-control and discipline while giving them exposure to a new world of endless possibilities.

"I would personally like to thank the leadership and team at AGM Financial Services for identifying and awarding Project Pneuma with such a generous grant,” said Damion J. Cooper, CEO & Founder. “Your investment will greatly impact our work with continuing to build bonds of trust and love between boys of color and the Baltimore Police Department. This is what #BreathingNewLife is all about. Thank you!"

About AGM Financial Services


Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Media Contact

Dina Wasmer
410-366-9479 x101
dina@incitecmo.com
www.incitecmo.com

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Matt Daddio, AGM VP, Appointed to Baltimore Public Markets Corporation Board

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January 8, 2024: citybiz article (go to online article):

AGM Financial Services, a leading FHA lender and GNMA seller/servicer, is proud to announce the appointment of its Deputy Chief Underwriter and Vice President, Matthew Daddio, to the Board of Directors of the Baltimore Public Markets Corporation.

“Matt’s deep understanding of both finance and local communities, combined with his passion for Baltimore’s rich history and cultural vibrancy, make him an invaluable addition to the Baltimore Public Markets Corporation Board,” said Myles Perkins, CEO of AGM Financial Services. “We are confident his unique perspective will be instrumental in guiding the future of these iconic institutions.”

The Baltimore Public Markets Corporation oversees six of the city’s most beloved public markets, including the historic Lexington Market, the oldest continuously operating public market in the United States. These markets serve as vibrant community hubs, offering fresh produce, handcrafted goods, and diverse culinary experiences.

Daddio, a graduate of the University of Maryland and Johns Hopkins Carey Business School, joined AGM in 2011 and has played a key role in the company’s success. His expertise in underwriting and real estate finance, coupled with his commitment to responsible lending and community development, is well-aligned with the Baltimore Public Markets Corporation’s mission of preserving and enhancing these treasured city landmarks.

“I am pleased to have been entrusted with this responsibility and deeply committed to contributing to the Baltimore Public Markets Corporation’s vital work,” said Daddio. “Baltimore’s public markets are treasured pieces of the city’s rich history. They were built and operated to sustain their local communities, not just as places to shop, but as places to gather. I look forward to working with the board and the community to ensure these vibrant marketplaces continue to thrive for generations to come.”

About AGM Financial

Founded in 1990, AGM Financial Services is a leading FHA lender and GNMA seller/servicer specializing in multifamily financing nationwide. We provide developers and owners with accessible, transparent, and consistent lending solutions for new construction, substantial rehab, acquisitions, and refinancing of both market-rate and affordable projects. With over $10 billion in closed loans and a dedication to responsible lending, AGM is committed to building stronger communities across the country. For more information on AGM Financial Services, please visit agmfinancial.com or call 800.729.4266.

Newsletter: December Pulse Check

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It seems that the conversation about interest rates is changing — something on everyone’s holiday wish list.

For over a year now, rates have been rising, and the conversations have been grim. The ten-year UST briefly topped 5% on October 22nd, and there seemed no end in sight. “Survive until ‘25” was what developers were saying, and it was almost always offered with a nervous laugh.

Today, the outlook is beginning to change. The ten-year UST is around 4.20% as of this writing. …

READ MORE

As always, if you have any questions, please contact us. Until then, please enjoy this month's newsletter.

The Deal is Done: Longfellow Arms Apartments of Washington D.C.

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AGM Financial Services, Inc. is proud to announce the closing of an FHA-insured $2,734,300 mortgage under the 223(f) refinance program of Longfellow Arms Apartments in Washington D.C. Originally built in 1960 and renovated in 2009, this broadly affordable community features 30 units in one three-story building. All of the apartments are restricted to households whose incomes are at or below 60% of area median income.

We want to thank everyone who made this closing a success:

Borrower: Longfellow Arms NWDC Limited Partnership

Sponsor/Co-Sponsors: The C.A. Harrison Companies, LLC & Orchard Development Corporation

Consultant: New Urban Equity, LLC

Property Management: Armiger Management Corporation

Borrower’s Counsel: Tiber Hudson LLC

Mortgage Insurance Provider:

  • Regional & Satellite Office: New York HUD

  • Closing Office: Baltimore HUD

Mortgage Backed Securities: GNMA

Lender’s Counsel: Reno & Cavanaugh PLLC

Title Company: Premium Title & Escrow, LLC

Appraiser: Principle Valuation & Advisory Group

Capital Needs Assessment, E-Tool: Dominion Due Diligence Group

Environmental Studies & HEROS: Dominion Due Diligence Group and Bureau Veritas

Surveyor: VIKA Capitol, LLC

To see how AGM can make your deal work for you, contact AGM’s Origination Team.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $9 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Newsletter: November Pulse Check

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Emerging Trends: Office-to-Residential Conversion

At their fall meetings in Los Angeles earlier this month, the Urban Land Institute unveiled their annual Emerging Trends in Real Estate® for the US and Canada for 2024. Like the fall meetings themselves, ULI’s Emerging Trends is filled with uncertainty about the current state and near-term future of commercial real estate. The office sector – and downtown office properties in particular - are struggling amidst rising interest rates, oversupply, and changing patterns of work.

As always, if you have any questions, please contact us. Until then, please enjoy this month's newsletter.

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Joe Barsin

Illustrations by Joe Barsin are special because he combines a passion for history, culture and community with a deep seeded pride in America. Living abroad in Europe during his formative years developed his understanding of an artist’s role in defining a community’s culture and history. Being an Eagle Scout developed his sense of community, patriotism and appreciation for the natural world. Joe is a native of Akron, Ohio, who graduated from Kent State University with a degree in graphic design. He and his wife, Eva, started their own design firm, JEB Design, Inc., in 1998, and continue to work from home while raising their two boys.

Emerging Trends: Office-to-Residential Conversion

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At their fall meetings in Los Angeles earlier this month, the Urban Land Institute unveiled their annual Emerging Trends in Real Estate® for the US and Canada for 2024. Like the fall meetings themselves, ULI’s Emerging Trends is filled with uncertainty about the current state and near-term future of commercial real estate. The office sector – and downtown office properties in particular - are struggling amidst rising interest rates, oversupply, and changing patterns of work. An investment banker quoted in Emerging Trends summed it up this way:

“The fortress investments, the super secure investments in real estate—what the heck happened? Where did they go? Malls and office buildings were the storehouses of value, the great inflation hedges. And now the only thing that has really stood up over time has been multifamily.”

Faced with a seeming sea change in office, much of the discussion at the ULI fall meetings centered around the future of office and the downtowns in which they are located. Office-to-residential conversions were on everyone’s mind, and again, the path forward was uncertain.

A recent article in the Wall Street Journal entitled “Turning Offices Into Apartments Is Getting Even Harder”, pointed to the challenges of office-to-residential conversion – financing, construction costs, and slow approvals, among many others. And then, there are the challenges inherent in office floor plates ill-suited to residential uses and the risks inherent in major rehab projects.

Still, the Journal article cites CBRE as seeing a sharp increase in office conversions in the coming year. While some developers will wait for the value of underutilized office buildings to fall to their land value or purchase properties from lenders’ REO portfolios, many are finding creative ways to convert office to residential.

The ULI fall meetings included presentations by developers and design firms such as Los Angeles-based architects OMGIVNING on how even 1980s vintage office buildings can be converted to high-end multifamily properties.

Not too long ago, “return to cities” was the watchword in CRE and multifamily. The pandemic reversed those trends. Now, even in uncertainty, developers are looking for opportunity in multifamily office-to-residential conversion. The future of cities and their downtowns may depend on it.

To discuss your options or plans for your next multifamily project, AGM is ready to listen and lend.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Frank Grosch

Frank Grosch has over 34 years of experience in multifamily finance, development and operations in both for-profit and not-for-profit settings. Prior to joining AGM, Frank participated in the development, acquisition and financing of more than sixty affordable and market-rate multifamily projects with total capitalization exceeding $2.0 billion. He is an honors graduate of the University of Rochester and holds an MBA in finance from the Crummer School of Business at Rollins College in Winter Park, FL. He is the proud dad of two great kids, both in college.

The Deal is Done: Park Heights Senior Apartments

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AGM Financial Services, Inc. is proud to announce the successful closing of an $8,755,000 mortgage for the new construction of Park Heights Senior Apartments with FHA mortgage insurance under Section 221(d)(4). The sponsor obtained site control through an RFP process and a subsequent Land Disposition Agreement with the City of Baltimore. The building will be a single, 4-story elevator served apartment building. All 100 units will be age restricted to heads of household aged 62+. The project will have full-service units and amenities including an exercise room and community room. Utilizing 4% Low-income Housing Tax credits, all units will be restricted to 30%-60% of AMI. This neighborhood revitalization project received substantial state and local financial support, including Baltimore City’s use of American Rescue Plan Act (ARPA) funds. In the future, a second phase will be developed on an adjacent lot with a family building.

We want to thank everyone who made this closing a success:

Borrower: 4710 Park Heights Senior Limited Partnership

Developer: NHP Foundation

Co-Sponsors/developer: The Henson Development Company

General Contractor: Southway Builders Inc.

Property Management: Habitat America, LLC

Borrower’s Counsel: Reno & Cavanaugh PLLC

Borrower’s Counsel: Kelliher & Salzer, LLC

Borrower’s Counsel: Gallagher Evelius & Jones

Architect: Torti Gallas + Partners

Appraiser: Linden Valuation Consultants

Interior Designer: Joy Owens Interior

Market Analyst: Novogradac & Company LLP

A&E/Cost Reviewer: JPS & Associates, Inc.

Civil Engineer: STV Incorporated

Surveyor: Daft McCune Walker Inc.

Mortgage Insurance Provider:

  • Regional Center: New York HUD

  • Satellite Office: Baltimore HUD

  • Closing Office: New York HUD

Mortgage-Backed Securities: GNMA

Lender’s Counsel: Tiber Hudson, LLC

Title Company: Residential Title Services Inc.

Sustainability Consultant: Pando Alliance

Solar Consultant: Neo Solar Power Corp.

Clean & Green Team: Park Heights Renaissance

ADA Consultant: Steven Winters Associates, Inc.

Geotech: D.W. Kozera, Inc.

Environmental Engineer & HEROS: Environmental Health Consultants, LLC

Public Art: Art with a Heart

LIHTC Bond Issuer: Maryland Community Development Administration (CDA)

Issuer’s Counsel: Kutak Rock, LLP

Outside Issuer’s Counsel: Ballard Spahr LLP

The City of Baltimore: Department of Housing and Community Development
Mayor’s Office of Recovery Programs

City Counsel: McGuire Woods LLP

Bond Underwriter: Stifel, Nicolaus & Company, Inc.

Underwriter’s Counsel: Tiber Hudson LLC

Equity Bridge lender: BlueHub Capital

Equity Bridge Counsel: Pierce Atwood LLP

Tax Credit Syndicator: R4 Capital LLC

Syndicator's Counsel: Holland & Knight

Trustee: Wilmington Trust, N.A.

To see how AGM can make your deal work for you, contact AGM’s Origination Team.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $9 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Newsletter: September Pulse Check

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FHA: An alternative to variable-rate bank debt.

A recent article in the Wall Street Journal points to multifamily, following on the heels of office buildings and malls, as the next real estate class to come under pressure from investors and lenders. The problem, “isn’t lack of demand – rents have soared since 2020 – it is interest rates.” Underwritten two or three years ago assuming aggressive rent growth and low interest rates, many multifamily projects now are seeing all of their NOI – and, in some cases, more – go to service debt, with little or nothing left for investors.

As always, if you have any questions, please contact us. Until then, please enjoy this month's newsletter.

READ MORE

FHA: An alternative to variable-rate bank debt.

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A recent article in the Wall Street Journal points to multifamily, following on the heels of office buildings and malls, as the next real estate class to come under pressure from investors and lenders. The problem, “isn’t lack of demand – rents have soared since 2020 – it is interest rates.” Underwritten two or three years ago assuming aggressive rent growth and low interest rates, many multifamily projects now are seeing all of their NOI – and, in some cases, more – go to service debt, with little or nothing left for investors.

Bank CLS and mini-perm rates are typically priced with a spread over an index such as Prime or SOFR, are repriced as often as daily, and carry an all-in rate of the index plus a spread. On September 1, 2020, SOFR was 0.85%, and a loan with a 300 bps spread was priced all-in at 3.85%. Similarly, a loan priced at Prime plus 50 bps would have had an all-in rate of 3.75%.

As of this writing, SOFR stands at 5.31%. A CL or miniperm priced at SOFR plus 300 bps bears an interest rate of 8.31%. A loan at Prime plus 50 bps now is priced at 9.0%. 

For multifamily properties coming out of construction or in a mini-perm, rates of 8.5% or 9.0% are punishing, even in the face of strong rent growth since 2020.

At AGM, we are seeing FHA refinance opportunities as borrowers, many new to FHA, are looking for alternatives to variable-rate bank debt. FHA offers – and always has offered – attractive terms for multifamily borrowers. This includes:

  • Rates today at 5.75% plus MIP

  • 1.176 DSC

  • 35-year amortization and a 35-year term

  • Non recourse

For market-rate projects built to National Green Building Standards, MIP is 25 bps; otherwise, it’s 60 bps. And reducing your interest rate is actually quick and simple when rates come down.

If you have a multifamily project with a floating rate loan, an FHA refinance may be a great solution to the interest rate problem.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Frank Grosch

Frank Grosch has over 34 years of experience in multifamily finance, development and operations in both for-profit and not-for-profit settings. Prior to joining AGM, Frank participated in the development, acquisition and financing of more than sixty affordable and market-rate multifamily projects with total capitalization exceeding $2.0 billion. He is an honors graduate of the University of Rochester and holds an MBA in finance from the Crummer School of Business at Rollins College in Winter Park, FL. He is the proud dad of two great kids, both in college.

AGM Financial Closes $15 MM Renovation Loan to Provide Affordable Housing to Virginia Residents Senior Citizens of Marywood Apartments in Manassas to Benefit from the Deal

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FOR IMMEDIATE RELEASE

BALTIMORE, August 25, 2023 — AGM Financial Services, a leading FHA lender and GNMA seller/servicer nationwide, has successfully closed a $15,000,000 mortgage for the extensive renovation of Marywood Apartments in Manassas, VA. The achievement underscores AGM's commitment to supporting affordable housing solutions and exemplifies the company's dedication to meeting the unique needs of its clients.

John Spencer, Executive Director at Saint Mary's Housing Corporation, the organization behind Marywood Apartments, spoke highly of the collaboration. "Through all sorts of challenges, AGM was there with us to get our loan closed and we couldn’t be more pleased. We appreciate the AGM team’s efforts to get our FHA financing done."

According to one projection, as many as 6.4 million renters and 11 million homeowners will be cost burdened by 2035.Affordable housing ensures low-income seniors don't spend a disproportionate amount of their income on rent.

Affordable housing solutions like Marywood Apartments allow seniors to allocate more for essential needs like healthcare, medication, and nutrition. They also provides a sense of community, security, and support tailored to the needs of the elderly, ensuring not only a roof over their heads but also a nurturing and safe environment. By addressing the financial and social needs of seniors, affordable housing plays a crucial role in enhancing their overall quality of life.

The Marywood Apartment project will provide for $68,000/unit in rehabilitation to the 129-unit, age-restricted community with 100% Section-8 housing. The four-story, elevator-served building includes extensive amenities such as:

  • Large multipurpose community room

  • Fitness room

  • Hair salon

  • Library

  • Pottery studio

  • Laundry room

  • Meeting spaces on every floor

Margaret Allen

Margaret Allen, Chief Executive Officer of AGM Financial, expressed her admiration for the partnership. "John has always been smart, insightful, persistent, optimistic, and devoted to affordable housing. He’s our favorite kind of client!" she exclaimed.

The Marywood Apartments deal underscores the synergy between two organizations deeply committed to facilitating affordable housing and showcases the determination with which both entities operate, even in the face of challenges.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Media Contact

Dina Wasmer
410-366-9479 x101
dina@incitecmo.com

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The Deal is Done: Jefferson House Senior Apartments

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AGM Financial Services, Inc. is proud to announce the closing of an FHA-Insured $4,800,000 mortgage for Jefferson House Senior Apartments. Located in Lynchburg, Virginia, this community features 101 units in an elevator-served six-story building. Amenities include a laundry facility, meeting room, exterior patio area, and a new fitness center. This community was financed under the 223(f) refinance program and is broadly affordable, with all units restricted to households whose incomes are at or below 60% of the area median income (AMI).

We want to thank everyone who made this closing a success:

Borrower: Jefferson House LLC

Sponsor/Co-Sponsors: JE Properties LLC / DuPont Residences LLC

Property Management: Westminster Company

Borrower’s Counsel: Jones Johnston & White, P.C.

Surveyor: Hurt & Proffitt

Mortgage Insurance Provider:

  • Regional Center: Baltimore HUD

  • Satellite Office: Boston HUD

  • Closing Office: New York HUD

Mortgage Backed Securities: GNMA

Lender’s Counsel: Krooth & Altman LLP

Title Company: Terra Nova Title & Settlement Services

Appraiser: Peter S. Eckert & Company, Inc.

Capital Needs Assessment, E-Tool: Dominion Due Diligence Group

Environmental Studies & HEROS: Dominion Due Diligence Group

To see how AGM can make your deal work for you, contact AGM’s Origination Team.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

The Deal is Done: Marywood Apartments of Manassas, VA

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AGM Financial Services, Inc. is excited to announce the successful closure of a $15,000,000 mortgage for the extensive renovation of Marywood Apartments, benefiting the residents for many years to come. This remarkable project will provide for $68,000/unit in rehabilitation to this 129-unit, age-restricted community with 100% Section-8 housing in Manassas, Virginia. The 40-year FHA insured loan was made using the Section 221(d)(4) program providing long term fixed rate construction / permanent debt. The four-story, elevator-served building includes extensive amenities such as a large multipurpose community room, fitness room, hair salon, library, impressive pottery studio, laundry room, and meeting spaces on every floor.

We want to thank everyone who made this closing a success:

Borrower: Second Saint Mary’s Housing Corporation

Sponsor/Co-Sponsors: Saint Mary’s Housing Corporation

General Contractor: Hamel Builders, Inc.

Property Management: Quantum Real Estate Management

Borrower’s Counsel: Furey, Doolan & Abell, LLP

Architect: Miner Feinstein Architects, LLC

Rent Comparability Study: Novogradac Consulting LLP

Civil Engineer: Miner Feinstein Architects, LLC

Surveyor: Jeff Warner Land Surveying, Inc.

Mortgage Insurance Provider:

  • Regional Center: New York HUD

  • Satellite & Closing Office: Baltimore HUD

Mortgage Backed Securities: GNMA

Lender’s Counsel: Vorys, Sater, Seymour & Pease LLP

Title Company: Community Title Network, LLC

Appraiser: Linden Valuation Consultants

Capital Needs Assessment, E-Tool: Dominion Due Diligence Group

A&E/Cost Reviewer: Dominion Due Diligence Group

Environmental Studies & HEROS: Dominion Due Diligence Group

To see how AGM can make your deal work for you, contact AGM’s Origination Team.

About AGM Financial

Founded in 1990, AGM is a leading FHA lender and GNMA seller/servicer. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — AGM gets the deal done. Family-owned with over 30 years of experience, the firm has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Newsletter: August Pulse Check

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“Embracing the Shift”

Last month, reflecting on a headline from the New York Times, we pondered, “Will Real Estate Ever Be Normal Again?”. Recent developments suggest that multifamily developers, owners, and lenders might be witnessing a transition towards a more consistent environment, even if it's not entirely the "normal" we remember.

As always, if you have any questions, please contact us. Until then, please enjoy this month's newsletter.

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