Any of y’all getting deals done?
Checking in now that Q1 2026 is basically done. Curious to hear from everyone what you’re seeing today and what deals/how many deals you’re working on today, and market coverage.
We have a multifamily deal that will close soon (Sunbelt; core plus) but otherwise it’s been pretty slim pickings for what we’ve found interesting.
Our background:
Multifamily, core plus/value-add across the Sunbelt. Capitalized through our balance sheet
Based on the most helpful WSO content, the multifamily market has been experiencing some challenges recently. Deals are falling out as some major landlords are struggling to price risk appropriately, leading to dropped deals rather than retrades. Teams are also taking a cautious approach, going "pencils down" for a few weeks to assess the market conditions.
However, there are still opportunities in the Sunbelt region, which remains attractive due to its low state income tax rates, lower costs of living, high job growth, and favorable demographics. Markets like Phoenix, Dallas, Austin, and Orlando are highlighted as strong performers, particularly for core plus and value-add strategies. These areas benefit from good weather, a highly educated population, and strong economic fundamentals.
If you're closing a multifamily deal in the Sunbelt, you're likely tapping into one of the more resilient markets. While the overall deal flow might be slower, focusing on off-market opportunities or conservatively underwritten deals could help maintain momentum.
Sources: What Markets and Core sub markets do you think will experience rapid growth over the next 3-5 years ?, Development vs Acquisitions Lifestyle, Great Deals You've Recently Done, Multifamily Deals are Starting to Fall Out, Q&A:New Real Estate Development Shop
Deals are plodding along in development. We have some STNL deals we're doing with nationals and regional users. Grocers are signing deals all over our market, we inked one for one of our sites. Other than that, it looks like residential development is picking up a bit as well. Looking to deliver most of these deals late 2026/early 2027. I'm in the southeast for reference.
On the multifamily side in the Sun Belt people are doing deals but they are doing them for fees and/or to recoup pre-dev spend. Acquisitions don't make sense because cap rates are still way too low relative to interest rates and forward rent growth. And you can buy brand new stuff right at replacement cost so that should tell you something about the actual yields on new development.
Our funds investing in Senior Living can't place capital fast enough. It's almost too busy right now!
Senior living having their moment in the sun right now for sure
It's crazy. You can literally see cap rate compression on a monthly or even weekly basis right now.
Thats interesting. Would love to hear more about why the high demand. Did it hit all together or are there some one time events causing this spike in demand?
I mean like anything, it's multiple factors: Valuations are still, for the most part, below replacement value, demand is continuing to grow with an aging population, and operators are pushing rent growth closer to 4-5% with very little pushback. So capital is looking to partner with established operators and get in at an attractive basis.
Large players like Welltower have obviously been doing this for a while, but institutional exposure to senior living is still a pretty small allocation in most funds. I think it's being viewed as a hedge and a diversification play within broader housing fund strategies.
I agree with this. As an operator, we’ve helped two developments with capital commitments get done in March (close to $500MM total capitalization). Both projects near areas where the median net worth (however you calculate it), with a 4% annual distribution on their retirement portfolio for the senior citizen, would cover the $10,000+ base rent. And, they don’t have to sell their house. This is benefiting the rental model especially (compared to traditional CCRC buy-in models). This is the bedrock of this investment thesis.
Senior housing is a hedge against broader disruptions in the employment market that affect other asset classes more. Plus, the number of 85+ year olds quadrupling from 2000 to 2040, the Silver Tsunami is reaching shore. We have been able to increase rents, especially when headlines telegraph inflation, and the need to maintain service quality.
Self storage deals still moving along from a development standpoint. Deliver one in the next month, start construction on another mid summer, close on another late this year. SoCal market for reference
Getting inbounds regularly on opportunities. Still waiting for prices to get better at my firm
same here. cant underwrite anywhere near target return thresholds without bullshit assumptions
Fuck no
Not in MF, but in sunbelt for deal size of >$50M mixed use.
Deals are happening but slow for reasons below.
Sellers who purchased pre-covid don’t want to realize any losses. If they have enough capital to continue, they will hold until they sell at or decently above their pre-covid acquisition price. They’ve already been in the deal for 5+ years and they’re not going to throw that all away to make zero promote. They’d rather double down and gamble on better conditions a few years down the road.
Lenders: They are hard to get good terms from. Even well capitalized and experience sponsors are still getting expensive debt. It’s not as bad as it was maybe 3 years ago, but effective interest rates are still 7-8% easily.
Distressed Sellers: Whether it’s a lender driven sale or an owner who is cash strapped and is pressure to exit the investment. Nobody is willing to sell for “cheap”. There are lots of rumors and ideas from simpletons whose strategy is “let’s just buy distressed CMBS assets or loans with upcoming maturity!” Yeah, good luck with that. I see deals with $90 million in defaulted debt that should sell for let’s say $50-60 million to the market. Nobody is willing to eat that $20-30 million loss though. They would rather extend the loan another 3 years.
Winning Bidders: On deals that are traditionally marketed, I’ve been noticing a lot of the groups who are successful in outbidding let’s say 5-10 other offers are ones who have long time horizons and less required returns. Typically they are HNW family offices or syndications with 7-10 year horizons and modest return expectations. If you are targeting 2x multiples and 30% IRR returns, don’t expect to win many bids.
LPs: Most institutional LPs have unrealistic expectations. They want to buy at a super low basis, make double digit CoC returns, put in little capital to lease or renovate, and flip the asset quickly. I want whatever those Ivy League guys are smoking, because they may have better luck just buying Powerball tickets.
It’s really a combination of underwater sellers who won’t sell for a giant loss, buyers who only want to buy at rock bottom pricing, expensive cost of capital, and the winners are private family offices who can move quick and play the long game. Generally could be described as gridlock. This may not be the case in NYC or LA though, or for all deals.
If you are in a deal for 5+ years and are currently underwater or near your basis, your promote is long gone and it's not coming back.
What I've seen in those types of deals is a GP that knows the promote is long gone, wants to sell and move on but the LP wants to hang on and gamble on a better climate in 27.
Is it the LPs that are unrealistic or the sellers? The LP's are investing funds across a variety of verticals and currently finding that the risk-reward of real estate right now isn't justified compared to their alternatives. Real estate used to be a cash flow game that turned into a quick flip appreciate game in the last decade, but now that the musical chairs have stopped the investors want cash flow again and being called unrealistic because sellers are used to the 2010's. They'd prefer not to get many deals done and move that capital somewhere else if they can't find what they want here.
It’s the sellers being unrealistic. Even in the 2010s you still had significantly positive leverage.
For those of you who are in debt originations, what kind of targets/goals do you have? How are those being met?
For those of you in acquisitions, do you have any targets/goals for capital deployment? How is that going?
The reason i ask is because i have various friends in debt who say their targets/goals are to put out $1bn/year. Unless your average deal size is $200M and you're doing ~5 deals a year, idk how you get that done.
With an average deal size of $60-75M that's like 1-2 deals a month, which doesn't seem realistic from the debt side IMO.
You've got refi's though too, and I think that's where debt has been particularly active.
Doing some small club deals in Europe focused on senior living (c. 5 m€ per deal), addressing particularly desperate sellers and repositioning assets for institutional investors.
Northeast MF development. We just signed a GMP and are closing on the loan in a few weeks, so that's one project that's going, thank god. Everything else is stalled, costs are just too high and it's difficult to justify even higher rents than my area already has.
Just looked at a Manhattan resi deal. Valuation’s high and is still in fixer-upper mode. Waiting for prices to be more attractive and current ownership to take better care of their asset before putting my own money to work in the deal
ZERO idea how anyone is getting deals done on deals that actually make sense and worth taking on from a risk adjusted return. good thing I found an interest in niche fragrances. a much better industry to get into right now even though its also insanely hard to get into
Not really. Have been close on a few things past 6mo and have a few deals we are going for now, so maybe something will work out soon
Went to a broker happy hour a couple weeks ago. One of the larger regional players is in asset management mode and has pushed off renovations on most deals as they aren’t yielding the premiums intended. A mid size developer had just done layoffs the day before, I was chatting with a former employee who said they have 0 in the pipeline
Can only think of one group in my markets who I would say is currently really active. We look at most of the same deals though and I’m scratching my head at some of their purchases
Is this the DMV market? Sounds way too familiar with what's happening around here.
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