CBRE Survey Indicates Optimism by Investors

Sun Belt sees consolidation

Multifamily buyers in Sun Belt markets consolidated into a barbell-like distribution on the risk curve since the rate hikes in 2022, according to Adam Nourafchan, a managing partner at Lunada Rose Partners.

“Core buyers jumped in despite substantial negative leverage with the thesis that either rents would grow or cap rates would drop, while opportunistic buyers were anticipating a wave of distress stemming from aggressive COVID-era bridge loan maturities,” Nourafchan told CPE. “After nearly three years, cap rates have not dropped, and there has been minimal distress, causing disillusioned investors from both strategies to shift toward a medium-risk approach where they can increase value through a hands-on capital improvement strategy rather than relying on market factors that are out of their control.”