Looking for a general gut check, or what others are seeing in the market (both currently and pre-rate hikes).
My context has generally been on the multifamily side, but I was used to seeing private credit sizing to a DY of 8-9% on ground up MF (west coast core markets, for context). With untrended cap rates in the mid 5%, this equates to a 250-350 bps spread between untrended cap and untrended DY.
Spread would conceivably widen depending on property type.
Assuming it was financing of an existing asset (i.e. stabilization/value add), should the DY metrics change much? i.e. if asset is a value add multi deal where untrended cap rate assuming market rents / total investment is a 6.5%, should the associated DY be 250-350 bps above that similar to a construction deal? Or would the fact that the execution risk being less allow for DY spread to come in below?
I understand that there are no hard and fast rules here, just moreso wanting to get the forums opinion on how to think through this.
I think your dscr will matter more than dy on existing assets if you're trying to squeeze out as many dollars as possible
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