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April 13, 2018  

Barings Offering 'Bridge' to Agency Loans

Barings Real Estate is rolling out a program that aims to originate bridge loans for property owners that plan to ultimately line up permanent agency loans.

Over the next 12-18 months, the Charlotte unit of MassMutual expects to write some $300 million of floating-rate loans on apartment buildings, student housing and other types of properties eligible for Fannie Mae and Freddie Mac financing.

In some cases, loans will be geared toward transitional properties that need to be renovated and/or leased up to qualify for long-term mortgages. Barings will also target borrowers that need bridge loans while awaiting approval for agency loans. The process of arranging a Fannie or Freddie loan can take many months, a timeframe that might not meet the needs of an investor seeking to buy or refinance a property.

Barings is funding the program with $85 million of equity from investment vehicles that it manages. It will supplement that capital with leverage to juice its returns.

The investment manager is hoping that the program will provide a pipeline of business for its agency-lending arm. In 2016, the company bought agency lender ACRE Capital from Ares Management of Los Angeles for $93 million. After the deal closed, Barings re-branded the shop as Barings Multifamily Capital. The bridge loans will be originated by that affiliate, which will seek to convert them to agency loans.

In addition to multi-family and student-housing properties, the program will finance skilled-nursing and senior-housing properties.

Greystone, Hunt Mortgage, Wells Fargo and some other agency lenders have long had bridge-lending units targeting the same niche. Other lenders have entered the sector over the past year, including a joint venture between Blackstone Mortgage and Walker & Dunlop of Bethesda, Md.