Greystone’s Rosenberg and Freddie Mac’s Brickman See Multifamily “Largely Unscathed” in Shutdown

Two of the leading CEOs in the multifamily lending space, Freddie Mac’s David Brickman and Greystone’s Stephen Rosenberg, compared notes amid the current backdrop of a pandemic and economic downturn as part of the Greystone Insights: Live webcast series. As might be expected, both industry leaders gave multifamily fundamentals a positive check-up, but noted that the longer-term outlook is still a question mark.

For Freddie Mac’s multifamily lending portfolio, “Things are holding up remarkably well,” said Brickman. Notwithstanding the widespread concern about what’s going to happen from this point, at the moment “we see the portfolio showing relatively few signs of weakness.”
If the recovery follows a relatively positive trajectory, Brickman said he sees the portfolio making it through the current situation “largely unscathed.”

Similarly, Rosenberg reported being “pleasantly surprised” at how limited the impact has been on Greystone’s own portfolio. “On collections, we’re down maybe 2%, 3%,” he said. “And we were surprised at the small number of forbearance requests that were coming in. Most borrowers seem to be able to handle the small reduction in collections.”

Brickman noted that the forbearance requests coming in from Freddie Mac borrowers have tended to be concentrated in smaller properties of 50 units or less, with a slight emphasis on the student housing and seniors housing segments. Moreover, the requests have stabilized.

“The big question is what happens from this point going forward, in terms of the ability to withstand if there’s continued stress in terms of cash flows and what ultimately happens to the government support that’s being provided to a lot of the renters,” said Brickman.

That being the case, Rosenberg expressed optimism that Greystone’s portfolio, as well as Freddie Mac’s, would fare “pretty well. People feel an obligation to pay their rent” and will “put all discretionary spending behind” in order to meet that obligation.

Rosenberg and Brickman had comparable stories to tell regarding the pandemic’s impact on multifamily values, which to date has been smaller than expected. However, Brickman cited a bid/ask gap in the current environment.

“Buyers are demanding some greater concessions, and trying to make the analytical/quantitative argument that cap rates should be higher and prices should be down 10% to 15%,” he said. For their part, buyers “generally are not budging. The question in this stalemate is, who’s going to move first?”

In the hour-long webcast, Rosenberg and Brickman also discussed Freddie Mac’s response to the pandemic, its strategic approach to support liquidity in the multifamily market, and its commitment to partner with borrowers and lenders during the current challenges. A replay of the webcast is available by clicking here.

Pictured, above left: Stephen Rosenberg. Below right: David Brickman.

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