Multifamily's generational trade sits in the debt stack

The 2026 clearing basis for apartments is being set inside the debt stack, before anyone negotiates a purchase price. Lonnie Hendry brought the post-pandemic office story to a multifamily audience and left it there: the have/have-not split that began in office, Trepp's chief product officer told Connect Apartments 2026 in Los Angeles, now encompasses apartments — market-specific and, within a market, not even street-specific, since two apartment buildings on the same block can post entirely different outcomes depending on the debt stack and who operates them.

Multifamily is still performing exceptionally well against other asset classes, Hendry said, and the averages hide a lot of properties that are underwater. The session, moderated by Cushman & Wakefield's Bryan Doyle, ran against high interest rates, inflation and the conflict in Iran.

Michael Cohen, managing partner at Brighton Capital Advisors, started in CMBS in 1991 and called this cycle unique: there is capital available to buy and the lenders have money. The problem sits on the other side of the trade: leverage on multifamily runs near 100%, he said, and anyone who bought between 2017 and 2023 is over-leveraged. Lenders have not forced borrowers' hands, but Cohen's account of what they are doing amounts to the same thing — taking control, installing receivers, combing the documents for personal recourse carve-outs.

The rescue-capital market this publication argued the refinancing wall would produce is arriving, and the panel supplied the mechanism. Chris Tourtellotte, a managing director at LaTerra Development, is still pursuing deals and said the difficulty is finding them, because capital wants existing assets, often new construction selling at or near its loan balance, which plants the buyer's basis within reach of the seller's debt.

"Obviously, you don't want to be a seller today," he said. "But I think there's some generational buying opportunities." The catch, he added, is clearing equity partners' return expectations.

That catch is where the phrase outruns the trade. A sponsor buying near-par new construction is taking on someone else's 2021 underwriting and betting rent growth covers the gap; a sponsor buying the loan, the preferred equity, or the asset out of receivership gets a basis the quoted equity market does not produce. The apartment bid therefore looks broad while transactions stay thin. The 475,000-unit pipeline and 95.5% occupancy — a 2028-29 supply gap that patient capital captures — cut against treating the panel as a green light for buying at today's asking prices. Trepp's second-quarter review found six of ten community banks running off multifamily loans, pointing the same direction with balance sheets rather than sponsors doing the selling. The 2017-2023 vintage is where the marks get made, and the receivership dockets and loan-sale tapes will publish them.