Rising interest rates are already making a difference for apartment properties. Borrowers can no longer secure the large permanent loans that have become used to.
“Delivering full-leverage loans has become a challenge,” says Dustin Dulin, managing director in the capital markets platform of real estate services firm JLL. “It is not as easy to underwrite the deals… Back in 2015, almost every deal underwrote cleanly.”
The change is carving a hole in the budgets of borrowers who need to buy or refinance apartment properties. To fill the gap, borrowers have to come up with more equity, often either from their own balance sheets or from new equity partners. Eventually, higher interest rates are expected to get in the way of transactions—though that hasn’t happened yet.
View entire article here in National Real Estate Investor
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