Successful Structures

CBRE’s Trehubenko favors transparency, patience and clarity when structuring complex affordable housing financing.

By Keat Foong, Executive Editor

Last year, Todd Trehubenko and his team at Walker & Dunlop won the MHN Excellence Award for Best Transaction for their work on the $90 million financing of the landmark 777 Main Street in downtown Hartford, Conn. Trehubenko’s accomplishments on the transaction typifies his specialty—structuring complex apartment transactions, with a strong emphasis on affordable and mixed-income housing. Trehubenko, who is now senior vice president at CBRE, and whose past positions include CEO of Recap Real Estate Advisors, is an industry veteran with 25 years of experience in the field. He has personally structured nearly 200 transactions in his career, using capital sources including FHA, GSE, banks, life companies and state housing finance agencies. Keat Foong, MHN executive editor, caught up with Trehubenko to obtain some insights into how to structure complex, multi-source financing that fulfills the requirements of multiple stakeholders.

What financing products and services does CBRE Capital Market’s Debt and Structured Finance group offer for the multifamily and affordable marketplace?

CBRE Debt and Structured Finance assists clients by arranging debt and equity for all major property types.  For multifamily, this includes direct lending through Freddie Mac, Fannie Mae, and FHA (collectively over $8.6 billion in 2014) as well as construction financing, mezzanine debt, and joint venture equity through relationships with more than 250 capital sources including banks, life insurance companies, and CMBS lenders.

What is your role at CBRE? Are you continuing to structure complex transactions?

I advise apartment owners on financing and transaction opportunities. Many of my clients own portfolios of affordable or mixed-income properties which were developed over many years using many capital sources and are by their nature very complex. I am also working to increase the amount of affordable housing lending we are doing overall at CBRE by assisting my colleagues across the country on new affordable deals and developing new capabilities for our platform.

Are there any key challenges, from the lenders’ and/or the borrowers’ viewpoints, in structuring complex affordable housing financing today? And what is the best approach to surmounting these challenges?

Despite low interest rates and the overall strength of the apartment market, many of the familiar challenges remain—the need for multiple sources of funding for affordable deals, the timing and coordination issues that result, and the need to reconcile competing objectives and requirements.  As always, the best approach to overcoming these challenges is to work with experienced, committed professionals who understand the affordable housing industry and can design and then execute a transaction that meets the needs of all of the key stakeholders.

What are the most attractive sources of structured finance for affordable housing and their availability?

FHA continues to be an excellent source of long-term capital and offers more favorable loan terms for properties meeting its definition of affordable housing. Fannie Mae and Freddie Mac are now offering pricing advantages for affordable properties, and these loans are not counted against the 2015 volume cap established by their regulator Federal Housing Finance Agency. With this level of interest and commitment by these agencies and rates continuing to be very low, it’s a great time to be an affordable housing borrower.

You are a veteran in structuring complex transactions. What are the most important lessons you have learned from your many years of success in the field?

Transparency is critical, and it’s very important to understand (define) success for all parties at the outset. In the effort to offer below-market affordable rents, the underlying economics of a property must be viable for the long term or the transaction will ultimately be a failure. And, as Chaucer wrote, patience is a conquering virtue.

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