The Deal is Done: Morris H. Blum Senior Apartments

AGM Financial Services, Inc. is proud to announce the successful closing of a $9,370,000 mortgage for the substantial rehabilitation of the Morris H. Blum Senior Apartments in Annapolis, Maryland. This is an elderly/non-elderly disabled preferred community with Rental Assistance Demonstration (RAD) / Section 18 conversion covering 100% of the units with long term Section 8 contracts. AGM financed the project with a 40-year FHA-Insured mortgage under the Section 221(d)(4) program paired with the federal 4% low-income housing tax credit program. The project is a joint venture between the Housing Authority of the City of Annapolis (HACA) and The Community Builders, Inc. (TCB), a non-profit affordable housing developer.

Located near the Navy-Marine Corps Memorial Stadium, this eight-story, elevator served building provides 154 apartments. Sixteen of the units will be restricted to households whose incomes are at or below 30% of the area median income (AMI), 62 units will be restricted to at or below 40% AMI, 70 units will be restricted to at or below 60% AMI, and 6 units will be restricted to at or below 80% AMI. The amenity package includes a multipurpose community room, a computer room, a laundry facility, and a medical clinic that is utilized for tenants by local non-profit agencies. The rehabilitation will provide $156,000 per unit in renovations and improvements.

AGM has now completed 28 RAD transactions nationwide. 

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

Borrower: Morris Blum Senior LLC

Sponsor/Co-Sponsors: The Community Builders (TCB) / The Housing Authority of the City of Annapolis (HACA)

General Contractor: Harkins Builders, Inc.

Property Management: The Community Builders, Inc.

Borrower’s Counsel: Nixon Peabody, LLP (TCB) / Ballard Spahr LLP (HACA)

Architect: Quinn Evans Architects

Appraiser: Linden Valuation Consultants

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

Surveyor: KCW Engineering Technologies

Mortgage Insurance Provider:

• Regional Center: New York HUD

• Satellite & Closing Office: Baltimore HUD

Mortgage-Backed Securities: GNMA

Lender’s Counsel: Tiber Hudson, LLC

Title Company: First American Title Insurance Company

Environmental Studies & HEROS: AEI Consultants

LIHTC & TEB Bond Issuer: Maryland Community Development Administration (CDA)

Issuer’s Counsel: Kutak Rock LLP

Bond Purchaser: Chase Bank

Bond Purchaser: Counsel: Tiber Hudson, LLC

Trustee: Wilmington Trust, N.A.

Trustee’s Counsel: McGuireWoods LLP

County HOME Lender: Arundel Community Development Services, Inc. (ACDS)

ACDS Counsel: Linda Schuett Law

Tax Credit Syndicator: U.S. Bancorp Community Development Corporation

Syndicator's Counsel: Applegate & Thorne-Thomsen, P.C. (ATT)

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

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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.

Embracing the Shift: Multifamily Real Estate Finds a Measured Path Forward

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.

Signs of Economic Balance?

While the larger economy still faces challenges, there's a sense of cautious optimism in the air. The once-pressing concern of inflation seems to be easing slightly, and job growth is holding its own. Many are hopeful that interest rates might stabilize soon. Amidst these varied signals, the multifamily industry is witnessing some positive momentum. Occupancy and renewal rates show promising trends in several markets, and demand is holding steady, even with the introduction of new properties. This suggests that the sector's appeal is enduring, albeit in a potentially evolved form.

A Hint of Stability Approaching.

At AGM, we've noted some indicators of more stable construction costs. From our discussions with multifamily builders, the consensus is that construction costs might be stabilizing. While some material costs have risen and others have dropped, the previously frantic pace of price hikes appears to be easing. GCs report that subcontractors, looking at their own pipeline of jobs, are calling and looking for work nine to twelve months out.

Navigating Promising Yet Unfamiliar Terrain.

The industry does still face challenges, such as varying insurance costs and fluctuating interest rates. Yet, there are inklings that we might be on the cusp of a meaningful evolution. It's possible that, instead of a full return to the old norm, we might see a blend of the familiar with the new, creating a more balanced environment. Those in the multifamily sector, accustomed to navigating its many shifts, are gearing up for this next phase – one where innovation meets tradition and stability counters unpredictability. The story of this multifamily landscape continues to unfold, and its path remains intriguing.

Rely on AGM’s Steady Hand.

Given these subtle yet positive indicators, now might be the right moment to contemplate your next venture. At AGM, with over 30 years of experience as a family-owned FHA lender and GNMA seller/servicer, we have deep insights into the multifamily CRE lending world. You’ll enjoy an easy, personalized experience and continuity throughout your transaction with a single, knowledgeable point of contact. It’s no wonder more than 60% of our borrowers are repeat clients. Count on our experienced team to guide you through every step of the FHA financing process and bring your deal to its successful completion.

Regardless of the economic backdrop, FHA is always a sound solution. AGM is here to collaborate, ensuring you secure a reliable multifamily loan. Please contact us with any questions you may have.

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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: July Pulse Check

“Will Real Estate Ever Be Normal Again?”

That was the headline for an article in the New York Times, not last week, but in November 2021. The article documented early COVID distortions in the single-family market, with skyrocketing prices and intense competition among buyers.

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

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Rising Multifamily Project Starts and Normalizing Construction Costs Create Hopeful Tailwinds

“Will Real Estate Ever Be Normal Again?”

That was the headline for an article in the New York Times, not last week, but in November 2021. The article documented early COVID distortions in the single-family market, with skyrocketing prices and intense competition among buyers.

In the multifamily industry, we are still asking that question.

Housing market predictions are a topic of much debate among experts. Housing construction – single-family and multifamily – is strong. Multifamily starts are up and construction costs are moderating, while at the same time, higher rates and higher labor, insurance, and other costs make deals much harder to pencil. There is a sense, but not a consensus, that rates and costs will come down in 2024, as will multifamily production as projects are completed and fewer projects get underway.

Where are we going?

It has been a long time since we saw a business cycle that went anywhere but up. We don’t really know when it will be “normal” again, but we can be sure that it will. Business cycles still happen, and the laws of economics haven’t been repealed. Rates will fall, costs will moderate, and demand for housing in the U.S. will not abate. “Normal” will no doubt be the “new normal” but it will come around again.

Multifamily remains a great investment class.

Multifamily housing has distinguished itself from other asset classes through all economic cycles and has been viewed as a safe haven during recessionary cycles. As we look ahead to 2024 and beyond, there’s no reason to think this will dramatically change. Those who can create and execute good deals will continue to come out ahead.

When you need a trustworthy partner on your side, count on AGM.

As a family-owned FHA lender and GNMA seller/servicer with over 30 years of experience, we know the multifamily CRE lending process inside and out. You’ll enjoy an easy, personalized experience and continuity throughout your transaction with a single, knowledgeable point of contact. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — we go to bat for our clients to bring deals to their successful completion. That’s probably why more than 60% of our borrowers are repeat clients. Count on our experienced team to guide you through the FHA financing process and help you get the deal done.

Whether real estate returns to normal or is on the threshold of a new normal, FHA financing is the smart, secure solution. AGM will partner with you to get an attractive multifamily loan you can count on. Please contact our helpful team today.

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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.

The Deal is Done: Naples Manor Townhomes of Silver Spring, MD

AGM Financial Services, Inc. is proud to announce the successful closing of an FHA-insured $17,918,000 mortgage for the Naples Manor Townhomes located in Silver Spring, MD. Built in 1988, these 64 three-story townhomes are surrounded by nature with access to the nearby retail, employment, and public transit. Together with their recent purchase of the community, the owner added income restrictions to preserve it as affordable. Thirteen of the townhomes are restricted to households making at or below 50% of area median income, and 51 are restricted to households making at or below 65% of area median income. The project was financed under the 223(f) Refinance program and Montgomery County supported the transaction by providing a tax abatement.

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

Borrower: ECD Naples Manor, LLC

Sponsor: Enterprise Community Development, Inc.

Property Management: Enterprise Residential, LLC

Borrower’s Counsel: Gallagher Evelius & Jones, LLP

Surveyor: O’Connell & Lawrence, Inc.

Mortgage Insurance Provider:

• Regional Center: New York HUD

• Satellite & Closing: Office: Baltimore HUD

Mortgage Backed Securities: GNMA

Lender’s Counsel: Reno & Cavanaugh PLLC

Title Company: Chicago Title Insurance Company

Appraiser: Principle Valuation & Advisory Group

Capital Needs Assessment, E-Tool: Partner Engineering and Science, Inc.

Environmental Studies & HEROS: Partner Engineering and Science, Inc.

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

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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.

The Deal is Done: Victory Tower of Takoma Park, MD

AGM Financial Services, Inc. is proud to announce the closing of an FHA-insured $8,900,000 mortgage under the 223(f) refinance program of Victory Tower in Takoma Park, MD. Built in 1971 and renovated in 2004/2005, this affordable senior and non-elderly disabled (NED) apartment community features 187 units in a twelve-story building. Amenities include a leasing office, community room with a kitchen, laundry room, a fitness center, and a dining room. All but four units are covered under two separate long term HAP contracts. Additionally, all of the units are income restricted based on legacy deed restrictions, limiting rents to 50% and 60% AMI households.

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

Borrower: Takoma Tower, L.P.

Sponsor/Co-Sponsors: Victory Housing, Inc.

Property Management: Habitat America, LLC

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

Architect: Soto Architecture and Urban Design, PLLC

Surveyor: Dewberry Engineers Inc.

Mortgage Insurance Provider:

• Regional Center & Satellite Office: New York HUD

• Closing Office: Washington, D.C. HUD

Mortgage Backed Securities: GNMA

Lender’s Counsel: Kennerly, Montgomery & Finley P.C.

Title Company: Potomac Title Corporation

Appraiser: Principle Valuation & Advisory Group

Capital Needs Assessment, E-Tool: AEI Consultants

Environmental Studies & HEROS: AEI Consultants

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

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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.

HUD Increases Large Loan Threshold from $75 million to $120 million: What it means for you

The Federal Housing Administration (FHA) is increasing the threshold for large loans from $75 Million to $120 Million.

This is the first increase in the threshold since 2014 and will facilitate additional underwriting flexibility for lenders like AGM when submitting FHA Multifamily insurance applications. FHA may increase it each year in $5 million increments. The changes are designed to simplify underwriting for multifamily housing development.

Why is this good news for developers?

FHA’s standard underwriting - 1.176 DSC and 85% LTV - is now available on loans up to $120 million. With higher leverage, fixed rates, longer terms, and all nonrecourse now available for larger loans, FHA financing is even more attractive.
 
If you have any questions or want to discuss how we can help with project needs, please reach out to us.

The Deal is Done: The View at Mill Run I of Owings Mills, MD

AGM Financial Services, Inc. is proud to announce the successful closing of an FHA-insured $74,308,100 mortgage under the 223(f) refinance program of the View at Mill Run I of Owings Mills, MD. Originally built in 2012 with financing provided by AGM, this market rate apartment community features 375 units in one four-story, elevator-served building. This community is part of a multi-phase development located along Dolfield Boulevard. Project amenities include a large clubhouse with kitchen, business/conference center, fitness center, yoga room, swimming pool, outdoor patio with California kitchen & shuffleboard, playground, and structured parking.

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

• Borrower: Run Crossing II, LLC

• Sponsor/Co-Sponsors: Sidney Emmer Builders, Inc.

• Property Management: The Dolben Company, Inc.

• Borrower’s Counsel: Carney, Kelehan, Bresler, Bennett & Scherr LLP

• Surveyor: BPR Land Surveying & Civil Engineering

• Mortgage Insurance Provider:

  • Regional Center: New York HUD

  • Satellite & Closing Office: Baltimore HUD

• Mortgage Backed Securities: GNMA

• Lender’s Counsel: Reno & Cavanaugh PLLC

• Title Company: Residential Title & Escrow Company

• Appraiser: Principle Valuation & Advisory Group

• Capital Needs Assessment, E-Tool: JPS & Associates

• Environmental Studies & HEROS: AZ-RI Consultants

• Green/Energy Consultant: EBI Consulting

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

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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: June Pulse Check - A brighter outlook?

Friend, Is a brighter outlook ahead?

A blog post published by the New York Fed on June 16 suggests that the economic outlook may be brightening. While not an official forecast, their latest post points to higher output and lower inflation later this year and into early 2024. This is a marked revision from March’s forecast.

“Output growth is projected to be much higher throughout the forecast horizon than in March,” and “long-term inflation expectations have dropped by about 45 basis points in 2023…a very large change by historical standards.” Inflation expectations drop to 2.5 percent in 2024 and 2.2 percent in 2025, down significantly from projections earlier this year. According to the new forecast, inflation returns close to the FOMC’s long-run goal of 2.0% inflation by the end of 2025.

In a presentation one day earlier at the Urban Land Institute’s midsummer meetings in Cincinnati, PNC’s senior investment strategist, Marc Dizard, pointed to a mixed outlook for the economy, noting both the strength in the labor market and resilient consumer spending on the one hand and persistent inflation and tightening credit on the other as just some of the mix of economic signals.

So, is the outlook brighter or “mixed”?

Perhaps the two points of view converge in Dizard’s comment that “the path forward continues to be driven by the path of inflation and the ongoing response from the Fed.” If inflation — and inflation expectations — moderate as the New York Fed suggests, and the Fed moderates its inflation response, the outlook could indeed be just a bit brighter.

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

June Newsletter: Read More

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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 www.agmfinancial.com.

AGM in the Community

Baltimore is AGM’s hometown. We take care of our own by supporting several not-for-profit and civic groups that help those in need. 

AGM’s founder and CEO, Margaret Allen, is a long-time Baltimore resident. She is active in a number of organizations, including more than ten years of service in various roles on the Foundation Board of Sheppard Pratt Health System — the nation’s largest private, nonprofit provider of mental health care. With services ranging from crisis care to residential and day services, developmental disability services, job training, and help with housing and homelessness, Sheppard Pratt serves more than 70,000 people annually. The birthplace of occupational therapy, Sheppard Pratt is also a leader in research on mood disorders, autism and developmental disorders, and suicide behaviors and prevention. 
   
Founded in 1853 by Moses Sheppard, Sheppard Pratt grew out of the Quaker traditions of social justice and caring for individuals in need. The organization remains true to its Quaker heritage and values of simplicity, peace, integrity, community, and equality.

“Sheppard Pratt is working to bring mental health care into the mainstream of health care in our community,” said Margaret. “It is a tremendous resource for all of us, with mental health care available in hospitals, clinics, schools, and other locations throughout Maryland. I am proud to serve on the Board.”

While our work spans the United States, AGM remains committed to making Baltimore a great place to call home.

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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 www.agmfinancial.com.

Newsletter: May Pulse Check

Here's what we're seeing and hearing:

In a recent conversation with a borrower – a savvy operator with decades of experience and a large portfolio – I asked how his properties were doing. “Fine,” he said, “things are returning to normal.” Normal sounded good to me.

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

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Interest Rate Caps are Dealing Crushing Blows to CRE Developers. Here's How to Avoid Them.

Using floating rate debt to finance multifamily projects is commonplace, unremarkable really—until it isn’t.  

With rising rates, an inverted yield curve, and wider spreads, getting or keeping variable rate debt on multifamily projects is becoming more difficult.

The CRE landscape is ripe for cash flow havoc.

A typical bank construction loan or mini-perm is priced based on the Secured Overnight Financing Rate (SOFR) plus a spread.  As the Fed has raised rates, SOFR has risen too. A year ago, SOFR stood at 0.79%. As of this writing, SOFR is 5.06%. Spreads are widening, too. Loans that were priced at 150 or 200 basis points over SOFR a year ago can price today at 300 over or more. Increases of that magnitude play havoc with construction loan interest reserves and can quickly push cash flow negative, even on otherwise healthy operating properties. 

Interest rate caps only add to the complexity.

Of course, lenders and developers can choose to hedge interest rate risk with caps. Fannie and Freddie require borrowers to purchase interest rate caps for the loan term or until the date of a permitted conversion to a fixed rate. What was once a backstop or just another cost of doing business is now out of reach for many borrowers and deals. Depending on the deal size, strike rate, and term, caps that once cost tens of thousands of dollars can now add millions to the cost of a project.

Remove the risk with FHA financing.

FHA financing for multifamily can be an excellent alternative to floating rate debt. With lower debt service coverages (DSCs) and longer amortization and terms (35 years for a refinance and 40 years for new construction), FHA can offer more proceeds on a given deal and eliminate both interest rate and refinance risk. 

When you need a trustworthy partner in your corner, rely on AGM.

As a family-owned FHA lender and GNMA seller/servicer with over 30 years of experience, we know the multifamily CRE lending process inside and out. You’ll enjoy an easy, personalized experience and continuity throughout your deal with a single, knowledgeable point of contact. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — we go to bat for our clients to bring deals to their successful completion. That’s probably why more than 60% of our borrowers are repeat clients. Count on our experienced team to guide you through the FHA financing process and help you get the deal done.

When the cost of doing business is steep and filled with risk, FHA financing is the smart, secure solution. AGM will partner with you to get an attractive multifamily loan you can count on. Please contact our helpful team today.

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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 www.agmfinancial.com.

Newsletter: April Pulse Check

Here's what we're seeing and hearing:

“Multifamily Turns to Alternative Financing in a Down Market”

That’s the headline of a recent article on Globest.com. Higher interest rates and higher cap rates mean developers are looking for ways to increase leverage and get new projects built. Alternative financing is always there on the periphery, emerging when the business cycle turns down. 

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

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How Davis Bacon Wages Impact Multifamily Construction - Enlightening New Research

The Davis-Bacon Act requires laborers and mechanics employed on FHA-insured housing projects to be paid wages at rates not less than those prevailing in the local market, as determined by the Department of Labor (DOL). When considering FHA-insured financing for new construction or substantial rehab projects, multifamily developers often express concern about the impact of Davis-Bacon wage rates on construction costs. However, our analysis shows that Davis-Bacon requirements have little, if any, impact on construction costs for residential projects in right-to-work states.

While looking at the impact of Davis-Bacon residential wage rates on project costs in heavily unionized and right-to-work states, we gathered information on both Davis-Bacon wage rates and average market wages as reported by the DOL's Bureau of Labor Statistics for seventeen MSAs around the country. We selected the MSAs based on size and the availability of wage data to gather a representative sample.

For the purpose of this research, we looked at wage data for six trades associated with multifamily construction - heavy equipment operator, carpenter, plumber, electrician, roofer, and general laborer. In right-to-work states, Davis-Bacon hourly wages are lower than reported MSA or state hourly wages for all but two of the occupations - heavy equipment operator and roofer. By comparison, Davis-Bacon hourly wages are well above the reported MSA and state average wages for the listed occupations in heavily unionized states.

The numbers in bold are the lowest of the three wage rates reported (Davis-Bacon, MSA average, and state average) for that occupation in the MSA. The numbers in red are minimum rates set nationally by Executive Order 14026 and serve as a minimum Davis-Bacon wage rate for that occupation.

The results are presented in the tables below.

Data from Clark County, Nevada, offers a case in point. Nevada is a right-to-work state, and Clark County, including Las Vegas, is its largest MSA. In Clark County, Davis-Bacon wages for five of the six occupations studied – heavy equipment operator, carpenter, plumber, roofer, and general labor – are lower than reported average hourly wages in the market and the state. Only one - the wage rate for an electrician - is significantly higher than the reported MSA and the state averages.

In right-to-work states, the Davis-Bacon wage requirements would appear to serve only as a floor for hourly wages on FHA-insured multifamily projects for the six trades studied. In those states, Davis-Bacon wages are, on average, 8.5% lower for the occupations studied. However, if we remove Detroit and Milwaukee (both heavily unionized markets in right-to-work states) from the calculation, Davis-Bacon wages are on average, 23.6% lower than the reported market wages.

The twenty-eight states and territories considered right-to-work include:

Alabama
Arizona
Arkansas
Florida
Georgia
Idaho
Indiana

Iowa
Kansas
Kentucky
Louisiana
Michigan
Mississippi
Nebraska

Nevada
North Carolina
North Dakota
Oklahoma
South Carolina
South Dakota
Tennessee

Texas
Utah
Virginia
West Virginia
Wisconsin
Wyoming
Guam 

Based on the data collected, Davis-Bacon wages are no higher than market wages in right-to-work states. Therefore, there would be no adverse effect on project costs for FHA-insured residential construction in these areas.

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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 www.agmfinancial.com.

Liquidity & Valuation: How to Combat the One-Two Punch on CRE & Multifamily

Could commercial real estate be the next shoe to drop at regional banks?

That’s the lead-in for a story posted recently on Marketplace.org. It is just one of a raft of stories in the media recently following high-profile bank failures in March. According to the Marketplace story, “banks have $270 billion of commercial real estate loans coming due this year” and “about $80 billion of that is in the office space”. There is a new focus on regional banks’ exposure to commercial real estate (CRE) – and office in particular. Office occupancies are generally down, valuations are uncertain, and many loans are coming due. According to a recent article in American Banker, “problems in the office space are likely to spread to apartments and retail properties”.

Access to capital may be more difficult.

Regional banks are a major source of capital for commercial real estate of all types. Developers often have deep relationships with those banks. As banks pull back, wary of exposure to commercial real estate and focused on liquidity in the wake of high-profile bank failures, developers may face difficulty accessing capital both for new projects and to refinance existing CRE loans. For CRE, liquidity could be a real issue.

Valuation poses another significant challenge. 

The rapid rise in interest rates is already being felt in cap rates.  An article posted on Globest.com suggests that cap rates are likely to rise significantly for apartments and other CRE. Even when debt is available, there will be pressure on loan proceeds as rent growth slows and valuations are in flux.

FHA loans offer stability in any financial landscape.

In the current climate, FHA-insured financing can be a solution to the twin problems of liquidity and valuation. Whether for new construction or refinance, FHA mortgage insurance means capital will always be available, with consistent underwriting across markets and over time. Lower debt service coverage (DSC) requirements and a longer amortization and term mean more loan proceeds. And for new construction, FHA underwriting is based primarily on cost and coverage, with no LTV test.

When you need a steadfast, trustworthy partner, rely on AGM.

As a family-owned FHA lender and GNMA seller/servicer with over 30 years of experience, we know the multifamily CRE lending process inside and out. You’ll enjoy a personalized experience and continuity throughout your deal with a single, knowledgeable point of contact. From new construction and substantial rehab to acquisition or refinance — for both market-rate and affordable projects — we go to bat for our clients to bring deals to their successful completion. That’s probably why more than 60% of our borrowers are repeat clients. Count on our experienced team to guide you through the FHA financing process and help you get the deal done.

Even amid banking uncertainties, FHA financing remains strong. AGM will partner with you to get an attractive multifamily loan you can count on. Please contact our helpful team today.

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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 www.agmfinancial.com.

Newsletter: March Pulse Check

FHA-insured loans are again in fashion. While higher interest rates are felt across the industry, FHA's lower debt service coverage and longer amortization and term – up to 40 years for new construction - mean greater proceeds to make deals work.

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

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South Alex: From Ashes to an Artfully Inspired 400-Unit Property

The People Committed to Community & Completion

(Photo Credit: www.southalex.com)

Alexandria, VA, March 21, 2023 — AGM Financial Services team members recently joined Fairfax County officials and community members for an emotional ribbon cutting ceremony following a devastating fire and triumphant rebuild of South Alex.

By now, many have heard the triumph over tragedy story behind South Alex. This two-building, five-story, mixed-use apartment complex replaced the Penn Daw Plaza shopping center in Alexandria, Virginia.

Flashback to Sunday morning, February 8, 2020, nearing 50% completion, South Alex, a $135 million project, burned to the ground. The framing, the metal steel bars inside the concrete, the adjacent prefabbed garage, the surrounding buildings, and even the footers needed to be replaced. It was a total loss.

But the story few have heard is what happened behind the scenes and the people who helped bring South Alex out of the ashes and transform it into the artfully inspired 400-unit property it is today. On February 22, 2023, South Alex and several people involved in the development celebrated its emotional opening.

Committed to Community

South Alex is located at the intersection of South Kings Highway and Richmond Highway near Reagan National Airport. The area had become stagnant with age and wear, causing residents to move away. In recent years, Fairfax County has stepped up efforts to encourage the revitalization of the Richmond Highway Corridor and promised to leave no one behind.

Combined Properties, known for its portfolio of retail and multi-family properties located in the Washington, DC, metro area, rose to the challenge. Founded in 1984 by Ronald S. Haft, Combined Properties has always looked for the true potential of a commercial property. “Instead of thinking about big boxes, we decided to think outside of the box,” said Haft. “We started thinking about community.”

To design a space where people could live, work, eat, and play while embracing art, Combined Properties had to rezone Penn Daw Plaza, which it did with the county’s help in 2014. But they would need financing to bring the project to fruition.

AGM Financial Services successfully obtained a 40-year, FHA-insured Section 221(d)(4) mortgage for this new Class A community — a $98.9 million construction/permanent loan.

In June 2016, demolition of the Plaza began, and in December 2018, the groundbreaking for South Alex took place, with ALDI lined up as the anchor retail tenant. All was moving forward as planned until the unexpected happened.

Photo Credit: www.southalex.com

Committed to Completion

The accidental fire broke out on a Sunday morning in February 2020. On Monday morning, Margaret Allen, CEO of AGM Financial, called an emergency meeting with all the players from South Alex, HUD, the fire marshal, and inspectors started work immediately. Everyone was committed to rebuilding and fulfilling their commitment to the neighborhood. 

AGM did the calculations, and HUD responded quickly. Together with the insurance company's cooperation, funds were wired, and within a couple of weeks, demo and cleanup began. The Combined Properties team broke ground for the second time in June 2021.

Myles Perkins, President of AGM, successfully negotiated a two-year extension to the start of amortization.. And the interest rate didn't change —unheard of under such circumstances. Everyone saw the value of getting and keeping South Alex on track.

Reneé Carroll-Smith, Vice President of Servicing, started working in the multifamily industry in 1989 and joined AGM in 2017. Her experience as an FHA loan processor was instrumental in the South Alex project and she shared a unique, personal perspective.

"My mom used to work at the Pentagon, and my father worked at the Kennedy Center, so I was very familiar with the Richmond Highway Corridor," said Reneé. "Growing up, we would go to the movie theatre, thrift store, and bowling alley. Now I take my grandkids to the Chucky Cheese near South Alex and say, 'Look, I did that!' It's very fulfilling to know that I played a part in giving someone a safe, affordable, beautiful place to live. That's one of the many things I love about working with AGM. They are committed to affordable housing projects, and it was a dream come true to work with Margaret Allen. When she talks, everyone listens!" 

Committed to the Future

South Alex has a promising future. The property's first tenant, ALDI, held its grand opening earlier this month. Today, the property is 60% leased, With a vibrant mix of shops, restaurants, and community spaces, South Alex pushes the boundaries of modern apartment living with unparalleled amenities, individualized service, and stylish interiors—all with the best of the Washington DC region in easy reach. To see floor plans, take a virtual tour of South Alex.

AGM would like to thank everyone who made this closing a success:

• Borrower: South Alex Subsidiary LLC

• General Contractor: CBG Building Company LLC

• Property Management: Bozzuto Management Company, Combined Properties Inc.

• Architect: Hord Coplan Macht, Inc.

• Borrower’s Counsel: Ballard Spahr LLP

• Civil Engineer: Urban Ltd/Greenway Engineering Inc.

• Mortgage Insurance Provider: Baltimore Field Office of HUD

• Mortgage Backed Securities: GNMA

• Servicing Mortgagee: AGM Financial Services, Inc.

• Counsel To Servicing Mortgagee: Krooth & Altman, LLP

• Surveyor: Urban Ltd

• Title Company: Fidelity National Title Insurance Company

• Appraiser: Kevin O. Curnyn, MAI

• Market Analyst: Real Property Research Group

• Environmental Studies & Review: Dominion Due Diligence

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

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About AGM Financial Services

AGM is a privately held company headquartered in Baltimore, MD, and a nationwide licensed FHA Mortgagee (lender) providing financing for both Market Rate and Affordable Housing communities. 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 $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. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

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Media Contact

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

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The Deal is Done: Rosemont of Baltimore, MD

AGM Financial Services, Inc. is proud to announce the successful closing of an FHA-insured $11,139,700 mortgage for the substantial rehabilitation of 106 apartments located in Baltimore, Maryland. The property was originally built in 1975 and consists of 14 residential buildings plus a former recreation center that will be repurposed to house the all new clubhouse and management office. This 100% Section 8 property will undergo a RAD conversion, allowing nearly $200,000 per unit in renovations.  Financed using FHA Mortgage Insurance, 4% Tax Credits, Tax Exempt Bonds, Rental Housing Works Funds, MEEHA – EmPower Funds, and Partnership Rental Housing funds.

Borrower: Telesis Baltimore Corporation

Sponsor/Co-Sponsors: Telesis Baltimore Corporation

General Contractor: Southway Builders, Inc.

Property Management: Neighborhood Partners, LLC

Borrower’s Counsel: Gallagher Evelius and Jones LLP

Architect: Moseley Architect P.C

Rent Comparability Study: Southway Builders, Inc.

Civil Engineer: KCW Engineering Technologies, Inc.

Surveyor: Mathew C. Zane

Mortgage Insurance Provider:

• Regional Center: New York HUD

• Satellite & Closing Office: Baltimore HUD

Mortgage Backed Securities: GNMA

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

Title Company: Chicago Title Insurance Company

Appraiser: Valbridge Property Advisors

Capital Needs Assessment, E-Tool: JPS & Associate Inc.

A&E/Cost Reviewer: JPS & Associate Inc.

Environmental Studies & HEROS: Urban Green Environmental

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

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About AGM Financial

AGM is a privately held company headquartered in Baltimore, MD, and a nationwide licensed FHA Mortgagee (lender) providing financing for both Market Rate and Affordable Housing communities. 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 $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. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

How AGM is Leading Affordable Housing Financing in Maryland and Across the Nation

Over the past ten years, Baltimore-based AGM Financial Services has financed nearly 2,700 affordable rental units in twenty-two projects with our developer clients and Maryland's Community Development Administration (CDA), the state's housing finance agency. These projects, serving low-income families and the elderly, provide critically needed affordable housing in Maryland.

AGM's $230 million in long-term FHA-insured financing has leveraged an additional $400 million in LIHTC equity and CDA subordinate debt in projects across the state.  The projects - roughly split between substantial rehabilitation of existing properties and the new construction – have been developed by a range of local and national for-profit and not-for-profit developers.

“Affordable housing has always been very important to us at AGM” according to Myles Perkins, AGM's president. “We finance affordable housing all over the country, but we are particularly pleased to be a part of the solution here at home in Maryland.”

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About AGM Financial

AGM is a privately held company headquartered in Baltimore, MD, and a nationwide licensed FHA Mortgagee (lender) providing financing for both Market Rate and Affordable Housing communities. 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 $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. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.

Newsletter: February Pulse Check

This year’s National Association of Home Builders International Builders’ Show (NAHB IBS) in Las Vegas brought together nearly 70,000 builders and developers of single-family and multifamily housing from around the country. Every builder is interested in seeing the latest trends. In a time of inflation and rising interest rates, every developer wants to see how deals are getting done.

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

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