The other headwind was “‘dumb investments’ made in value-add apartment deals at the top of the market bubble in 2021-22,” McKee says. “Investors overpaid and overleveraged these deals based on unsustainable low interest rates and rosy rent growth projections.” Much of this action was the result of macroeconomic forces. A long stretch of low interest rates, capped by pandemic-era zero interest rate policy, gutted fixed-income investment. With a flood of liquidity from fiscal and monetary policies between Congress and the Fed, many investors pushed into CRE, with multifamily as one of the favorite resting places. That drove up prices, pushed down cap rates, and required the rent growth projections to pencil deals. That created “the matter of short-term loans maturing now that require refinancing,” Tim Donovan, managing director of Midloch Investment Partners, tells GlobeSt.com. “There’s trouble on this front for sponsors who are over-leveraged with projects that are underperforming. These loans will have to be worked out. There will have to be some capital calls.” https://lnkd.in/eEDPR4mT