Multifamily at a Reset Basis: Where the 2021–2023 Vintage Goes From Here

Between 2021 and 2023, more capital chased U.S. multifamily than at almost any point in the asset class's history. Purchase prices set records. So did construction costs. And most of it was financed with cheap, floating-rate debt — underwritten on the assumption that rents would keep climbing and rates would stay near zero.

For a while, the math worked. Then it didn't.

When benchmark rates rose sharply and stayed elevated, the floating-rate loans behind that vintage repriced — and the interest-rate caps many sponsors bought to protect themselves expired or became prohibitively expensive to renew. Debt service climbed past what the property could cover, and loans that were never designed to be refinanced at these rates began hitting maturity.

The important part: in many of these deals, the building is fine. Occupancy is healthy, tenants are paying, the roof doesn't leak. What broke wasn't the asset — it was the balance sheet wrapped around it.

The asset didn't fail. The balance sheet did.

That distinction is the whole opportunity. A meaningful share of the strain in this cycle now sits with the lenders — banks and debt funds holding notes on performing, or nearly-performing, real estate that the borrower can no longer carry. These are institutions built to finance buildings, not to own and operate them.

When a well-located, physically sound property runs into a capital-structure problem, a lender's least-bad outcome is often to move the note rather than foreclose, hold, and operate an asset outside its mandate. That is precisely where a disciplined, operator-led buyer becomes the natural counterparty.

Our approach is to acquire the debt, or the asset itself, directly from those lenders — before it reaches a broadly marketed auction. We buy non-performing loans and REO, step into mid-foreclosure positions, and, where needed, finish the foreclosure ourselves. The goal is a single number: a cost basis reset to what these assets are worth today, not what they traded for at the peak.

In practice, that basis frequently lands below replacement cost — below what it would cost to build the same property new. Enter there, and you don't need heroic rent growth or cap-rate compression to win. You need to operate.

That basis is real, not theoretical. In Lakeland, Florida, we acquired the loan on a brand-new, 160-unit community directly from the lender — new product, no deferred maintenance, at a basis below what the project cost to build.

Buying paper at a discount is not, by itself, a strategy — plenty of investors can bid on a loan. The edge is what happens after you own it: taking the keys, stabilizing operations, and running the property. Our team has spent years repositioning distressed multifamily across high-growth U.S. markets — rebuilding on-site teams, running multimillion-dollar capital programs, and returning broken assets to performance. We buy the basis, then we execute the plan.

It's also why our sourcing is relationship-driven rather than auction-driven. Direct lines to the lenders and banks holding this paper get us into deals early, at a price that reflects their motivation to move on — not a competitive bidding war.

The loans behind the 2021–2023 vintage don't all come due at once; they mature on a rolling schedule over the next several years. This isn't a distressed moment to be perfectly timed — it's a multi-year window in which well-capitalized, operationally capable buyers can acquire quality real estate at a genuine reset in basis.

We built Nivora Capital for exactly this part of the cycle.