Feb 12 in General discussion
Have You Heard of "CASH IN Refi"?
This Bad News, Good News!
Back in mid-2020 up to 2022, multifamily cap rates compressed and I saw a lot of syndicators overpaid for apartments. What's worse, a third of them got FLOATING RATE debt.
That's debt where the interest rate changes.
The Fed increased the interest rate at a rate so fast it was crazy and nobody expected them to do that. And the worst part? Some of those floating-rate debt loans are maturing THIS YEAR (see the gray bar in the chart below).
The result? In the 2nd half of this year, a lot of the apartment syndicators who borrowed loans like these will be in FINANCIAL TROUBLE. The lenders will try to work something out with them and one of them is for the borrowers to BRING MORE cash to the table and refinance them to fixed-rate debt.
This is what is meant by CASH IN REFI. This is BAD NEWS for those syndicators and their passive investors. We will see a lot more CAPITAL CALLS. And syndicators who can't raise the money to do these cash-in refi's?
They will get FORECLOSED on by the lenders.
This is GOOD NEWS for someone like me who did not buy a lot of apartments between 2020 to 2022 because I didn't want to overpay for them.
It's a BUYING OPPORTUNITY. We will see prices drop by as much as 30% vs 2020 to 2022 levels.
Are you ready to buy?
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Have You Heard of "CASH IN Refi"?
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