Capital for multi-family real estate investments was cheaper in the second quarter of 2012 than ever before, according to a release from Chandan Economics, the firm founded by Sam Chandan, the former chief economist of Real Capital Analytics.
According to the report, the cost of financing acquisitions and refinancing maturing loans fell to 4.0 percent in the quarter, down from 4.35 percent in the first quarter and 5.0 percent in the same period a year ago. Chandan attributed the dwindling costs to historically-low Treasury yields, vast improvements in fundamentals and competition among lenders to fund multi-family deals in the strengthening sector. As a result, debt yields also fell to 9 percent for the quarter.
Cap rates for deals backed by loan balances greater than $25 million were 5.6 percent, while cap rates for sales below $5 million were 6.8 percent. The overall average was 6.1 percent, Chandan said. — Adam Fusfeld