The Growing Opportunity for Rescue Financing in U.S. Multifamily

By Paul Rahimian, Founder, CEO, Brad Ross, Managing Director, Head of Originations, Dhaval Parikh, Managing Director, Head of Capital Raising & Investor Relations, Parkview Financial

While the multifamily sector continues to demonstrate strong historical fundamentals and long-term resiliency, the sustained high-interest rate environment has led to a temporary spike in the number of assets with stressed capital structures. Projects nationwide continue to exhibit sustained high occupancy rates and rental rates and are benefiting from increased barriers-to-entry in the homebuying market. Despite this, the sector faces significant headwinds and a wave of defaults and loan maturities. In fact, nearly $100 billion in previously-maturing multifamily loans were previously extended to 2025, with another $310 billion now scheduled to mature this year.¹  As we’ll discuss in this latest Insights piece, stress in the multifamily market is manifesting itself in various ways, which is also creating opportunities for alternative lenders.  

STRESS IN THE MULTIFAMILY SECTOR

Most current development projects, whether new construction or existing bridge, were capitalized prior to wave of Federal Reserve rate hikes. As a result of higher interest rates, borrowers often went over budget on interest carry costs through the life of the project and have ultimately taken longer to complete their projects. This has required borrowers to issue capital calls, bring in preferred equity, or negotiate deals with their existing lenders to get their projects to completion. For those resilient borrowers that managed their projects to completion, they now face a new challenge - values on completed projects are down ~20% nationwide on average due to increased cap rates2. This has resulted in a deterioration of equity for the borrower and “underwritable” loan proceeds from the next lender that fall short of the incumbent maturing construction or bridge loan balance. These proceeds fall short because high interest rates constrain permanent loan takeout proceeds due to debt service coverage limitations. Borrowers facing any combination of these challenges will find themselves at an inflection point of how to best proceed in today’s market. 

OPPORTUNITY FOR RESCUE FINANCING

This confluence of factors has created an increased need for rescue financing in today’s lending environment. A lender that can provide a borrower with a construction completion, Certificate of Occupancy, or lease up-type bridge loan in today’s environment is of incredible value. This new financing can provide a crucial lifeline for a borrower and create a compelling investment opportunity for the new lender. While the new loan may still require an equity infusion from the borrower to some degree, it is generally a preferable execution than continuing to extend with the incumbent lender. The new loan will have a “reset” basis and enough loan term to allow the borrower to execute their business plan without stress in the capital stack. Naturally, not every deal will qualify for this lifeline. Picking the right opportunities and structuring deals appropriately, will provide strategic lenders with some of the best lending opportunities since the Great Financial Crisis in our view. 

PARKVIEW’S STRATEGY

While opportunities exist across the capital structure, Parkview believes that senior secured bridge lending is the most compelling opportunity both in today’s market and long term. Preferred equity and mezzanine loan strategies also help fill gaps in the capital stack, but they are generally substituting for borrower equity and therefore present equity-type-risk.  Parkview’s target strategy is to generate “equity-like” returns on senior secured-debt by providing holistic solutions to borrowers on projects that have been “right-sized” in today’s market.

Target loans will have already had a cash infusion or will bring new equity at closing. These deals will be historically strong basis plays on per-unit and per-square foot metrics and will each have a path to stabilization and refinancing once borrowers have had the chance to execute their business plan. We are targeting strong sponsors that have proven to stand behind their assets throughout market cycles. Our top priority is to make sure we are originating senior secured loans that capture the opportunity in today’s market, rather than inheriting a previous lender’s legacy risk at a high basis.   

We believe this strategy will provide investors with equity-like returns on quality assets in a secure position in the capital stack, at a historically low basis and LTV, with strong borrowers. Our focus on multifamily speaks to the strength of the asset class as a whole and the dislocation in today’s market given the stable asset-level performance of most projects. For lenders such as Parkview that can provide flexible and reliable financing solutions to borrowers, today’s market presents an attractive opportunity.   

CONCLUSION

The multifamily sector presents a compelling opportunity for lenders to strategically deploy capital and achieve attractive risk-adjusted returns. By providing crucial rescue financing through senior secured bridge loans, alternative lenders can not only facilitate the stabilization and improvement of assets, but also secure strong positions within the capital stack. The inherent demand for multifamily housing, coupled with the current market dynamics, creates a favorable environment for lenders, like Parkview, who can effectively identify and underwrite multifamily assets with the greatest potential. For investors, senior secured bridge financing can be an attractive strategy to capitalize on a near-term market dislocation, enhance portfolio yield, and diversify their mixed asset portfolio.    

1. "Multifamily Fundamentals Strengthen, but a Wave of Debt Maturity...", Globest, June 5, 2025. 

CoStar as of May 2025

By Paul Rahimian, Founder, CEO, Brad Ross, Managing Director, Head of Originations, Dhaval Parikh, Managing Director, Head of Capital Raising & Investor Relations, Parkview Financial