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Fannie and Freddie Fielding Increased Competition for Multifamily Financings in 2013

Jones Lang LaSalle completes nearly $1 billion in multifamily financings through Freddie Mac in 2012

SAN DIEGO, Feb. 4, 2013 — For the first time in more than a decade, apartments have replaced office as the top investment sector in the United States, and with that demand comes a commensurate need for debt capital.  While the Government-Sponsored Enterprises including Fannie Mae and Freddie Mac will continue to dominate the financing landscape for multifamily properties in 2013, Jones Lang LaSalle expects life companies, national banks, financial institutions and CMBS to further increase their market share in the year ahead.   

“Plentiful capital, ease of execution, and the ‘sweet spot’ in the 7- and 10-year, fixed-rate, 80 percent LTV financings kept the agencies on top in 2012—with Freddie Mac sourcing roughly $29 billion and Fannie Mae topping out around $33 billion,” said Faron Thompson, International Director and leader of Jones Lang LaSalle’s Freddie Mac Program Plus® lending business. 

Added Holly Minter, Executive Vice President, Jones Lang LaSalle, “We expect those numbers will continue to rise this year by about 10 to 15 percent for both Freddie and Fannie, but life companies, balance sheet lenders and CMBS lenders are increasingly muscling their way into the scrum with higher leverage, creative pre-payment structures and shorter loan terms.”

Agencies dominant but CMBS, Financial and National Banks add market share in 2012 

The attractive lending environment led to a banner year for Jones Lang LaSalle’s Freddie Mac Program Plus® lending business, as the firm closed nearly $1 billion in 50 financings around the country in 2012.  Led by Thompson, the firm also expanded its approved seller/servicer territories from the Southeast, to the Mid-Atlantic and the state of Texas.  

The firm’s top three Freddie Mac Seller/Servicer financings completed in 2012 include:

  • A refinancing for Crystal Square in Arlington, Virginia, that encompassed 378 units for $93.1 million
  • A refinancing for The Bennington, also in Arlington, Virginia, that encompassed 348 units for $68.3 million
  • Acquisition financing for Grosvenor Tower, in Rockville, Maryland, that encompassed 237 units for $46.5 million

While the agencies played a critical part during the Great Recession, providing liquidity when other lenders nearly disappeared, their role is expected to diminish in the years to come.  As the Mortgage Bankers Association’s white paper called “Ensuring Liquidity and Stability:  The Future of Multifamily Housing Finance and the Government-Sponsored Enterprises” opined at the end of 2012, “…private capital should be the primary source of financing for multifamily housing with a limited, government-backed insurance program ensuring that the market has access to liquidity in all cycles.”  But don’t expect any changes soon.

Added Thompson, “We probably won’t see any significant agency reform until at least 2014 because right now, Fannie and Freddie are garnering solid returns, doing a good service and continuing to help the economy.  Debt capital is ‘all in’ to the multifamily financing game, with the pipeline from nearly every lending source expected to grow.”

Jones Lang LaSalle Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2011 alone, Jones Lang LaSalle Capital Markets completed $60 billion in investment sale and debt and equity transactions globally. The firm’s dealmakers completed $52 billion in global investment sales and buy-side transactions, equating to nearly $216 million of investment trades completed every working day around the globe. In the United States, Jones Lang LaSalle grew its total Capital Markets volumes by 122 percent in 2011 and is quickly gaining market share across all property types. The firm’s Capital Markets team comprises more than 1,200 specialists, operating all over the globe.

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About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment Management, has $47.0 billion of real estate assets under management. For further information, visit