Multifamily debt amid higher interest rates: The appeal for liability-driven investors
The current market environment provides a unique opportunity for investors to secure – at scale – highly predictable medium duration cash flows from permanent multifamily real estate debt. Liability-driven investors are likely to become increasingly interested in these loans.
The current market opportunity for investors in permanent multifamily debt as we enter the summer months of 2023 include:Spread widening. Driven by underlying dynamics in the supply of, and demand, for capital, multifamily mortgage loan spreads over equal term United States. Treasuries are wide from an historical perspective (10-year loans are currently priced at a spread of about 230 basis points, compared with an historical average of 180 to 210 basis points). Locked-in attractive yield. Due to near-universal prepayment penalties, investors in multifamily debt can lock in attractive, predictable yield at today’s elevated