NewPoint Real Estate Capital, which earlier this month acquired Housing and Healthcare Finance, is planning to use the platform to catapult it among the top providers of loans under U.S. Department of Housing and Urban Development programs.
Housing and Healthcare, commonly referred to as HHC, had originated $958.63 million of HUD loans during the agency’s latest fiscal year, which ran through September. That’s a mere 2.5 percent of the overall HUD lending volume. The Bethesda, Md., company is a specialist in the healthcare sector.
NewPoint is growing aggressively – it funded about $200 million of loans during the first half of the year. But it expects to close $1.8 billion for all of 2021. The company was founded early this year through Meridian Capital Group’s acquisition of Barings Multifamily Capital LLC.
It has built out a bridge-lending platform, hiring seasoned lending executives that include Brian Skurnik and Mark Silverstein. Its focus initially will be to provide bridge financing against properties it later can provide permanent agency loans for. It expects to fund $1 billion of bridge loans next year.
The purchase of HHC gives NewPoint a strong footing in the HUD-lending market. While the company is a healthcare-lending specialist, it’s a seasoned HUD lender. That means its senior executives – Erik Lindenauer and Riche Lerner, who founded the company in 2002 and still run the shop – have a deep understanding of how to maneuver through what many consider HUD’s lengthy underwriting and originating processes.
“We soon will be among the leading players in the HUD space,” explained David Brickman, chief executive of NewPoint. “Understanding how to navigate the HUD process is the most important aspect” of a HUD lender.
Brickman explained that the originations volumes of both Fannie Mae and Freddie Mae are limited by regulatory lending caps. “There’s some spill-over from that,” he said. Meanwhile, there’s a continued healthy demand for agency loans from borrowers.
Indeed, this year through October, $201.3 billion of apartment properties had changed hands, according to Real Capital Analytics. That was more than 38 percent of the total volume of property sales. The expectation is that sales volumes, particularly of apartment properties, will remain strong as institutional investors increase their allocations to the commercial real estate sector.
And given where apartment-property capitalization rates are – some deals are getting done with three handles – it’s challenging for borrowers to get loans that amount to much more than roughly 75 percent of a property’s purchase price or value. HUD, however, is more generous, often giving borrowers the ability to borrow up to 85 percent of a property’s value. The downside, however, is that it takes time, often months, to complete a loan.
Brickman said HHC’s platform also should see growth in originations of healthcare loans, both for HUD and other lenders.
“We didn’t have depth in the seniors/healthcare sectors,” Brickman explained. “Now that we do, we can increase our activity in both agency and non-agency business. We can leverage the platform.”
The most-active HUD lender during calendar 2020 was Greystone Funding Corp., with $2.67 billion of originations. It was followed by Berkadia Commercial Mortgage, with $2.03 billion, and Dwight Capital, with $1.8 billion. “There’s no reason, in terms of the borrowers we serve” for us not to be in that league, Brickman said.
– Originally published by Commercial Real Estate Direct
– December 7, 2021