NMHC Takeaways?

I was shocked at how overall bullish it was. The last few years people have generally acknowledged there are challenges - oversupply, shitty capital stacks, lack of demand, and political risk. But this year, there was virtually none of that until I asked.  It was a lot of sunshine and rainbows about how despite transaction volume still being tough, tailwinds and "dwindling supply" were going to be the catalysts for big pops in late 2026 and into 2027.

Overall takeaways - tons of capital, both equity and debt.  Banks are back, agencies are kicking, and there's still plentiful debt fund and pref - all with compressed spreads. A boatload of good quality equity on the sidelines, mostly wanting newer product in sunbelt below replacement cost.  Red states in favor generally...things like Colorado's new cap on other income items put a big damper on those sorts of markets. Also lots of LP-driven sales...feels like Carlyle is the poster child for such, but I know there's a lot of other Class A deals on the market right now that are driven by other LP's. 

As noted above, interesting part was that when you pressed people on where the distress is, you got the same answers. Heavily oversupplied, lower demographic markets (DFW north of 380, DIA submarket in Denver, West Valley PHX, etc), and then only after continued pressing did we get to what I think is going to be the next decent-sized trouble spot...pref that is impaired and/or taking deals over.  

Nobody wants to acknowledge it, least of all the pref providers.  But I know for a fact that major household-name groups have positions that are dramatically underwater - in some cases the entire accrued pref basis is shot.  They have taken deals back and are now trying to salvage what they can, including things like broken HFC deals.  That's not to say it will be systemic, but there will undoubtedly be losses and trades at highly depressed basis. My shop has a pref group and while vast majority is alive and kicking, we have a couple problem children that our disposition group is having to come in to sell and hopefully save without too much egg on our face. 

Think there could be some "fatigue" from everyone that's been in this last ~5 year cycle talking about the same headwinds for those years, but it was just odd to me that people didn't at least acknowledge operations things like renter quality, bad debt, OpEx increases, renewal concessions, CapEx, etc while being very bullish on multi outlook over the next 18 months.  

Brokers reported a lot of groups that are winning deals UW things to get substantially better in the next 12 months. I love the long term fundamentals of multi, but my personal opinion is that anyone thinking their sunbelt deal is going to get materially better over that time period is absolutely fooling themselves.