Key Takeaways
- • Private debt funds now account for 47.2 percent of non-agency loan closings, up from 20.2 percent a year earlier, according to Principal Asset Management's Rich Hill, and represented about 15 percent of total loans in 2025 versus 10 percent in 2024 and roughly 5 percent in 2019.
- • MBA data cited in the article shows $875 billion of commercial loans, including 13 percent of all multifamily mortgages, maturing in 2026 and $652 billion in 2027, creating a refinancing pipeline that favors higher-leverage private lenders over banks.
- • Private series debt funds have generated volatility-adjusted returns in the high single-digit to low double-digit range, with roughly 90 percent from income, roughly double the return Hill attributed to private series equity.
- • Freddie Mac's shift away from selling B-piece tranches of K-Series securitizations has opened partnerships between CMBS shops and high-yield buyers, with JPMorgan and MF1 issuing a $734.2 million multifamily-only CMBS deal in May.
- • Competition among lenders is tightening pricing and, in some cases, loosening underwriting, giving borrowers more leverage in negotiating proceeds, structure and execution.
Summary
Private credit is becoming a durable part of multifamily financing, according to a Multifamily Housing News feature drawing on commentary from Principal Asset Management, Affinius Capital, Tremont Realty Capital, Yardi Matrix, Avison Young, Dekel Capital, Saluda Grade and Talonvest Capital. The growth has been fueled largely by commercial real estate's refinancing needs. The MBA reported that $875 billion of loans, including 13 percent of all multifamily mortgages, will mature in 2026, and $652 billion in 2027. The MBA's Quarterly Survey also found commercial and multifamily mortgage originations were 16 percent higher in the second quarter of 2026 than a year earlier and up 12 percent from the first quarter of 2026.
Debt funds have filled a gap left by banks, which remain selective and conservative on transitional and construction loans. Bank multifamily loans have typically offered fixed rates of 6 to 6.5 percent at 50 percent loan-to-value for five to 10 years, according to Collateral Partners, while private loans often carry floating rates, shorter horizons and mandatory equity gaps. Tom Lorenzini of Tremont Realty Capital said sponsors favor debt funds for customized financing of transitional assets and business plans that do not fit bank or agency requirements. Real estate investors are also seeking shorter commitments than the 10 to 20 year horizons of the past, which has increased use of closed-end funds.
Investor demand is driven by yield and risk-adjusted returns. Shlomi Ronen of Dekel Capital said debt yields relative to property pricing are attractive because investors are not taking last-dollar risk. Mark Fitzgerald of Affinius Capital added that multifamily debt offers current income, a reduced J-curve relative to higher-yielding equity, some inflation-hedging characteristics and exposure to a structural shortage of rental housing. Hill cited private series debt fund returns in the high single digits to low double digits, which he said were substantially above public REIT, private equity and CMBS returns.
Securitization is also expanding. Freddie Mac's move to offer junior credit-linked notes instead of selling B-piece tranches has drawn new buyers, according to Paul Fiorilla of Yardi Matrix. D2 Asset Management, founded by former Freddie Mac CEO David Brickman and Natixis, pairs Natixis on the senior loan portion with D2 holding the junior slice, allowing leverage up to 75 percent of property value at spreads 50 to 75 basis points above agency rates. JPMorgan and MF1 issued a $734.2 million multifamily-only CMBS in May, and other CMBS-B-piece partnerships include Barclays and 400 Capital Management, Citigroup and Greystar, and Wells Fargo and Bridge Investment Group.
Industry participants said the sector is maturing and competitive. PGIM has raised more than $19 billion in real estate debt capital over five years, Blackstone's real estate debt platform manages roughly $77 billion, and Benefit Street Partners raised $10 billion for a multifamily-focused fund. Fitzgerald said a receding supply wave should support occupancy and rent growth for properties in lease-up. Kathy Corton of Saluda Grade said interest rates and inflation will shape transaction volume. Jay Maddox of Avison Young said competition is tightening pricing and sometimes underwriting, and Talonvest's David DiRienzo said lenders are using warehouse lines and CLO markets to provide scalable liquidity.
Debt funds have filled a gap left by banks, which remain selective and conservative on transitional and construction loans. Bank multifamily loans have typically offered fixed rates of 6 to 6.5 percent at 50 percent loan-to-value for five to 10 years, according to Collateral Partners, while private loans often carry floating rates, shorter horizons and mandatory equity gaps. Tom Lorenzini of Tremont Realty Capital said sponsors favor debt funds for customized financing of transitional assets and business plans that do not fit bank or agency requirements. Real estate investors are also seeking shorter commitments than the 10 to 20 year horizons of the past, which has increased use of closed-end funds.
Investor demand is driven by yield and risk-adjusted returns. Shlomi Ronen of Dekel Capital said debt yields relative to property pricing are attractive because investors are not taking last-dollar risk. Mark Fitzgerald of Affinius Capital added that multifamily debt offers current income, a reduced J-curve relative to higher-yielding equity, some inflation-hedging characteristics and exposure to a structural shortage of rental housing. Hill cited private series debt fund returns in the high single digits to low double digits, which he said were substantially above public REIT, private equity and CMBS returns.
Securitization is also expanding. Freddie Mac's move to offer junior credit-linked notes instead of selling B-piece tranches has drawn new buyers, according to Paul Fiorilla of Yardi Matrix. D2 Asset Management, founded by former Freddie Mac CEO David Brickman and Natixis, pairs Natixis on the senior loan portion with D2 holding the junior slice, allowing leverage up to 75 percent of property value at spreads 50 to 75 basis points above agency rates. JPMorgan and MF1 issued a $734.2 million multifamily-only CMBS in May, and other CMBS-B-piece partnerships include Barclays and 400 Capital Management, Citigroup and Greystar, and Wells Fargo and Bridge Investment Group.
Industry participants said the sector is maturing and competitive. PGIM has raised more than $19 billion in real estate debt capital over five years, Blackstone's real estate debt platform manages roughly $77 billion, and Benefit Street Partners raised $10 billion for a multifamily-focused fund. Fitzgerald said a receding supply wave should support occupancy and rent growth for properties in lease-up. Kathy Corton of Saluda Grade said interest rates and inflation will shape transaction volume. Jay Maddox of Avison Young said competition is tightening pricing and sometimes underwriting, and Talonvest's David DiRienzo said lenders are using warehouse lines and CLO markets to provide scalable liquidity.
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