Small multifamily properties, defined as having between 5-49 units, represent a significant portion of the rental market. They accounted for 33% of renter-occupied housing units in 2018. Origination volumes for small multifamily loans were estimated to be $59.2 billion in 2019, up 9.5% from the previous year. Small multifamily property prices increased 6.8% from the fourth quarter of 2018, while capitalization rates remained largely unchanged at 5.8%. Fannie Mae and Freddie Mac played a growing but still relatively small role in the small multifamily lending market, originating a combined $11.5 billion or 19% of total small multifamily loan volume in 2019.

1. Small Multifamily Loans
Q4 2019

2. 1
Small Multifamily Loans Q4 2019
Small Multifamily Loan Program Summaries
Fannie Mae
• Loans of $6 million or less nationwide and loans for properties with 5 to 50 units
• Conventional properties; Multifamily Affordable Housing properties; Cooperative properties (market-rate); Manufactured Housing
Communities; Existing, stabilized multifamily properties
• Loans for acquisition or refinance; Amortization up to 30 years
• Terms of 5 to 30 years; Fixed- and variable-rate options available
• Maximum LTV: 80%; Minimum DSCR: 1.25x
Freddie Mac
• Loans of $1 million to $7.5 million nationwide and loans for small multifamily properties (typically 5 to 50 units)
• Unit limitations:
• Loan amount ≤ $6 million: no unit limitations
• Loan amount > $6 million and ≤ $7.5 million: up to 100 units (exceptions permitted above 100 units)
• Loans for acquisition or refinance; Amortization up to 30 years
• 20-year hybrid Adjustable Rate Mortgage (ARM) with initial 5-, 7-, or 10-year fixed-rate period -or- 5-, 7-, or 10-year fixed-rate loan
• Partial-term, interest-only; Full-term, interest-only may be available
FHFA
• Properties with 5 to 50 units
• FHFA will exclude the pro rata portion of the loan amount based on the percentage of units affordable at 80% of area median income
(AMI) or below in standard and cost-burdened renter markets; 100% of AMI or below in very cost-burdened renter markets; and
120% of AMI or below in extremely cost-burdened renter markets.
FHA (Section 207/223F)
• Structures with 5 or more units
• Maximum LTV: 83.3%; Terms of 30 to 40 years; Amortization of 30 to 40 years

3. 2
Small Multifamily Loans Q4 2019
14.7
35%
7.6
18%
13.7
33%
5.8
14%
Single-Family Rentals (1-Unit) Duplex-Quadruplex (2-4 Units)
Small Multifamily (5-49 Units) Large Multifamily (50+ Units)
Small Multifamily Represents a Third of the Rental Market
The nation’s rental market had a total of 41.9 million renter-
occupied housing units as of 2018, according to the U.S.
Census Bureau’s latest American Community Survey.
Small multifamily, which includes apartment properties of 5
to 49 units, represented 33% (13.7 million units) of the total
rental market.
Single-family rentals represented 35% (14.7 million units) of
total renter-occupied housing units, duplex-quadruplex (two
to four units) properties represented 18% (7.6 million units),
and large multifamily properties (50-plus units) represented
14% (5.8 million units).
Small Multifamily Market Share
Renter-Occupied Housing Units by Units in Structure (Millions)
Source: U.S. Census Bureau, American Community Survey, 2018
Note: Mobile home and boat, RV, van, etc. properties are not included in data

4. 3
Small Multifamily Loans Q4 2019
Source: Arbor; Chandan Economics
Small Multifamily Origination Volume
United States, Multifamily, Billions
Note: Chandan Economics defines small loans as those with original balances between $1 million and $7.5 million — including loans for rental apartment building
sales and refinancing.
$0.0
$13.0
$26.0
$39.0
$52.0
$65.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
Total Volume
Year Volume
2009 $11.1
2010 $13.6
2011 $21.7
2012 $32.5
2013 $40.4
2014 $41.9
2015 $44.9
2016 $47.6
2017 $49.9
2018 $54.2
2019 * $59.2
Year-end 2019 estimates of new small multifamily lending volume jumped to $59.2 billion. The current estimate beats the prior quarter’s
forecast by $1.4 billion and marks the highest level of activity in Chandan Economics’ post-financial crisis estimates.. Current projections
have originations up by 9.5% in 2019, below the 14.0% growth rate observed the year before.
* Through December 31, 2019

5. 4
Small Multifamily Loans Q4 2019
Source: Arbor; Chandan Economics
Arbor Small Multifamily Price Index (ASMPI)
United States, Quarterly, Q2 2000 = 100.0
100.0
150.0
200.0
250.0
300.0
3Q04
3Q05
3Q06
3Q07
3Q08
3Q09
3Q10
3Q11
3Q12
3Q13
3Q14
3Q15
3Q16
3Q17
3Q18
3Q19
Arbor Small Multifamily Price Index (ASMPI)
Small multifamily prices were up are up 1.4% from the third quarter and 6.8% from fourth-quarter 2018. Prices are above their 2010 low
by 89.1%, and they have surpassed their previous cyclical peak by 43.5%. Asset valuations have averaged an annual growth rate of 6.7%
since the sector returned to growth in late 2010.
The Arbor Small Multifamily Price Index is designed to measure the estimated average price appreciation on small multifamily properties,
which are defined as those with primary mortgages between $1 million and $7.5 million, and with 5 to 50 units, across the United States.
The index uses model estimates of small multifamily rents and compares them against small multifamily cap rates.

6. 5
Small Multifamily Loans Q4 2019
Source: Arbor; Chandan Economics
Small Multifamily Cap Rates
United States, Quarterly
National average cap rates for small multifamily properties effectively remained flat at 5.8% through the fourth quarter, moving down by
all of 2 basis points (bps). Nevertheless, the most recent reading reflects the lowest post-crisis level on record. Closing the book on 2019,
yields are down by just 13 bps from the end of last year. Historically low costs of capital and over-competition in gateway markets have
pushed more investment activity to secondary markets, exerting downward pressure on cap rates.
0
30
60
90
120
150
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
1Q15
1Q16
1Q17
1Q18
1Q19
All Transactions Small Multifamily Spread (bps)
Note: Chandan Economics defines small loans as those with original balances between $1 million and $7.5 million — including loans for rental apartment building
sales and refinancing.

7. 6
Small Multifamily Loans Q4 2019
Debt Yields
United States, Quarterly
Loan-to-Value Ratio
United States, Quarterly
60%
63%
66%
69%
72%
75%
4Q14
4Q15
4Q16
4Q17
4Q18
4Q19
All Multifamily Small Multifamily
Debt Per Dollar of NOI
United States, Quarterly
Source: Arbor; Chandan Economics
Loan-to-Value (LTV) ratios averaged 70.6% on small multifamily loans originated during the fourth quarter of 2019, up 11 bps from the third
quarter and 205 bps from a year ago. Debt yields — the ratio of net operating income (NOI) and loan balance — for small multifamily loans
fell to 8.3% in Q4 2019, the lowest level of the cycle. For all multifamily properties, debt yields pushed further downward in the fourth
quarter, falling to 6.9%. Debt per dollar of NOI, the inverse of debt yields, rose to fresh peaks for both small multifamily and all multifamily
loans in the fourth quarter.
Note: Chandan Economics defines small loans as those with original balances between $1 million and $7.5 million — including loans for rental apartment building
sales and refinancing.
5%
6%
7%
8%
9%
10%
4Q14
4Q15
4Q16
4Q17
4Q18
4Q19
$7
$9
$11
$13
$15
$17
4Q14
4Q15
4Q16
4Q17
4Q18
4Q19

8. 7
Small Multifamily Loans Q4 2019
Fannie Mae and Freddie Mac Small Multifamily Loans
Multifamily, Dollar Volume, Billions
$1.1
$1.6
$1.9
$2.3 $2.2
$4.8
$2.6
$4.5
$7.8
$8.3
$6.7
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2014 2015 2016 2017 2018 2019
Fannie Mae Freddie Mac
Source: Fannie Mae and Freddie Mac Press Releases
Fannie Mae Freddie Mac
2014 $1.1 NA
2015 $1.6 $2.6
2016 $1.9 $4.5
2017 $2.3 $7.8
2018 $2.2 $8.3
2019 $4.8 $6.7
Fannie Mae multifamily small loans are defined
as those of $6 million or less nationwide and
loans for properties with 5 to 50 units.
Freddie Mac multifamily small loans are defined
as those of $1 million to $7.5 million, targeting
apartment buildings with 5 to 50 units.
Note: Totals may include loans originated
outside of designated small loan programs.

9. 8
Small Multifamily Loans Q4 2019
Source: Arbor; Chandan Economics; Fannie Mae and Freddie Mac Press Releases
Fannie Mae and Freddie Mac Share of Small Multifamily Loans
Multifamily, Based on Volume, Billions
$4.8
8%
$6.7
11%
$47.7
81%
Fannie Mae Freddie Mac All Others
2019
Total Volume = $59.2 Billion
Note: Chandan Economics defines small loans as those with original balances between $1 million and $7.5 million — including loans for the sale and refinancing of
rental apartment properties.
$2.2
4%
$8.3
15%
$43.7
81%
Fannie Mae Freddie Mac All Others
2018
Total Volume = $54.2 Billion

10. 9
Small Multifamily Loans Q4 2019
15,338
27%
14,938
26%
16,960
30%
9,964
17%
< $1 Million $1 Million - $3 Million $3 Million - $10 Million > $10 Million
Source: Mortgage Bankers Association
$8.8
2% $26.3
8%
$87.9
26%
$216.1
64%
Dollar Volume of Lending
Total Volume = $339.2 Billion
Distribution of Multifamily Lending by Loan Size
MBA Annual Report on Multifamily Lending
Number of Loans
Total Loans = 57,200

11. ARBOR.COM • 1.800.ARBOR.10
About Us
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origination and servicing for multifamily, single-family rental (SFR) portfolios, seniors housing, healthcare and other
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