Alliant CU sees ‘increased’ interest in commercial student housing loans

Alliant entered into third quarter loans of $ 51 million to fund student housing projects in Waco, Texas (top left), Knoxville, Tenn. (top right) and Baton Rouge, Louisiana (Photos courtesy of Alliant Credit Union).

Results from the nation’s largest credit unions showed that commercial real estate loans continued to show strong growth in the third quarter, in line with national trends.

Top 10 credit unions by asset size generated $ 1.4 billion in real estate-backed commercial loans in the third quarter, up from $ 1.2 billion in the second quarter and $ 211.6 million in the third quarter of 2020.

The Top 10 volume in the third quarter included $ 93.1 million from the ninth largest credit union, Alliant Credit Union in Chicago ($ 14.7 billion, 631,700 members). Its amount included about $ 51 million in funding for three student housing projects near Louisiana State University in Baton Rouge, Baylor University in Waco, Texas and the University of Tennessee in Knoxville.

Some of the biggest gains between the third quarter of 2020 and the third quarter of 2021 include:

  • Pentagon Federal Credit Union of Tysons, Va. ($ 29.7 billion, 2.4 million members) from virtually zero a year ago to $ 752.4 million.
  • BECU from Tukwila, Washington ($ 29.6 billion, 1.3 million members) multiplied by 16 to $ 191.5 million.
  • First Tech Federal Credit Union of San Jose, Calif. ($ 14.7 billion, 652,828 members) increased eightfold to $ 192.2 million.
Graph showing the growth of commercial loans for credit unions.

The latest NCUA data for all federally insured credit unions showed their start-ups were $ 10 billion in the second quarter – the highest amount since at least 2017. Second-quarter production increased by 20% from the first quarter and 41% from the second quarter of 2020..

And national data released Thursday by the Mortgage Bankers Association showed momentum continued into the third quarter.

The commercial and multi-family mortgage origination MBA index for the third quarter was the highest since at least the first quarter of 2018. It was up 119% from the third quarter of 2020 and 19% from in the second trimester.

Multi-family projects also posted a four-year record with an index up 105% from the third quarter of 2020 and 31% from the second quarter.

Alliant’s third-quarter mounts were 13% higher than a year earlier, but over the previous three quarters, mounts ranged from $ 184.1 million to $ 115.8 million.

Paul Letourneau, Alliant’s director of commercial loan origination, said he expects to close between an additional $ 200 million to $ 225 million in the fourth quarter and that his 12-month volume for 2021 will be 50% higher than in 2020.

“CRE loans gained momentum in 2021,” Létourneau said.

Paul Letourneau Paul Letourneau

Letourneau said the reasons for the increase include the expansion of its market presence by Alliant, the increase in the average size of its loans and the addition to its existing sales team.

“In addition, the markets are recovering from 2020,” he said. “Investors who were on the sidelines are now returning to the market, existing owners are refinancing to take advantage of the persistently low interest rate environment, and some asset classes are taking advantage of national trends in offshoring, labor. home and changing shopping. habits. “

Jamie Woodwell, vice president of commercial real estate research at the MBA, said commercial lending was strong, with loans backed by industrial and multi-family properties, each operating at a record annual pace.

“Borrowing hit an all-time high quarterly high in the third quarter, driven by strong or improving market fundamentals, higher real estate values, low interest rates and strong mortgage performance,” said Woodwell. “While office and personal loans have increased significantly from last year, both remain below 2019 levels.”

Jamie woodwell Jamie woodwell

In the multi-family sector, Alliant has hit the books on student housing.

“As college students returned to campus this fall, we continued to see increased investor interest in the student housing market, especially near top schools,” Letourneau said.

“When evaluating student housing loans, Alliant examines various metrics on the health and sustainability of the university, which encompass educational trends, changes in the student body, and the overall health of student housing properties. student housing in the market, ”he said. “The majority of properties that Alliant lends to are strong Power 5 conference schools with deep roots, resources and a proven ability to retain and graduate their students.”

In Baton Rouge, Louisiana, Alliant provided financing to Versity Investments to purchase the 244-unit building one mile south of the LSU campus. It is 100% leased for the current school year and has historically operated at almost full occupancy. The vendor has made extensive renovations to provide amenities including lounges, two swimming pools, a coffee bar, fitness center, and grill area. Versity Investments, which has previously borrowed from Alliant, manages more than 30 student housing across the country.

In Waco, Alliant provided an acquisition loan for a complex of 116 apartments in three buildings with a total of 455 beds operating at full capacity. Amenities included two resort-style pools and spas, a sand volleyball court, basketball court, private jogging track, and a fitness center. Free high-speed internet access and extended cable TV are included in every unit.

In Knoxville, Alliant refinanced the garden-style Maplehurst Park. Students rent 60% of the 196 units in 20 adjoining gardens and low-rise buildings. The property sits between the UT campus and the city center and is operating near full capacity. Upon acquisition, sponsors invested $ 6.25 million in renovating all units, as well as improving the facade and landscaping.

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