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Chase’s Greg Newman: Preparing for What’s Ahead in Multifamily Sector
Demand remains high for apartments across the U.S. The conditions for multifamily assets are being bolstered by a host of strong market fundamentals. Connect Media asked Greg Newman, Head of California Multifamily Lending for Chase, to share insights about the economy and multifamily market in our latest CRE Q&A. Last year, we talked to Newman about what it takes to get multifamily deals completed, so it is interesting to compare today’s environment to what he saw at that time.
Q: What’s currently top of mind for your clients?
A: We can all agree that we have been in a very long recovery and that someday, something, will happen. Our clients are seasoned local operators that are battle hardened and cycle tested. Most have very long memories, and set themselves up for downturns by building conservative fortress real estate portfolios and maintaining cash and liquidity on hand for any challenging times or opportunistic event that might come with a recession. They play the long game with a lifetime horizon.
Q: What stress tests should apartment owners perform in order to remain successful throughout the cycle?
A: Our clients are careful about understanding the independent cash flow of each and every property. Each property should be tested as a standalone business. What are the revenue upsides and downsides? Run revenue numbers using stressed rents declining by X percentage, as an example. Expenses may even be a higher priority, as many are just about being smart and becoming more efficient. In order to stress these, real estate developers and investors should think of economic scenarios that can impact their buildings. What if gas, electric and utility prices climb higher? What about real estate taxes? Should they invest in technology?
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Financing
