Debt & Distress in 25???

Hey there,

Who you invest with matters.

See the chart above 👆

✅ Have you hedged off interest rate risk?

✅ Are your rent growth assumptions realistic?

✅ Will the property cash flow day 1 and in year 3 even if you have no rent increases?

✅ Are there many exit plans?

✅ Do they have adequate reserve cash?

✅ Are the sponsors putting their own money in the deal AND willing to personally guarantee the loan?

Unfortunately, there are a lot of investors who’ve lost money and don’t even know it yet. There are also a lot of sellers who may miss their best exit if they hold much longer. The longer interest rates remain well above 6+% the more damage we will see. We are already seeing many deals come across our desk with pricing revisions lower.

Look at this chart from last week… Today, the 10-year is 4.77%. Add a 250 basis point spread to the 10-year rate and that is generally where new loan rates on multifamily will be.

i.e. interest rates for multifamily on new loans today are 7+%

The best pricing for apartment sellers in Northwest Ohio was likely September of 2024…. that point was the best mix of demand relative to available supply and new debt on multifamily was around 5.5%.

Questions always welcome!

Nate & Steven
Rust Belt Capital, LLC

www.rustbeltcapital.com

_Disclosure:
Rust Belt Capital, LLC is not a Registered Investment Advisor. Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. While the data we use from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of data provided by investors or other third parties. Rust Belt Capital, LLC does not provide tax advice and does not represent in any manner that any outcomes described herein will result in any particular tax consequence. This is not an offer to buy or sell any security. Offers to sell, or solicitations of offers to buy, any security can only be made through official offering documents that contain important information about investment objectives, risks, fees, and expenses. Prospective investors should consult with a tax, investment, or legal adviser before making any investment decision. Distributions or profitable investments cannot and are not guaranteed. Not intended to be tax advice and should not be solely relied upon to make an investment decision.