Private Debt Is Multifamily's Hero For The Day, But It Will Have To Prove Its Mettle As A Long-Term Savior

Borrowing from a debt fund can be risky business, but multifamily owners are starting to take the leap as refinancing options grow scarce.

Demand for alternative and niche funding sources is on the rise as the ongoing CRE credit crunch sidelines most banks. Cue private lenders like debt funds that have stepped into the void, offering short-term loans that allow investors to close a capital gap while they try to secure more permanent financing. 

As interest rates remain elevated, some owners with maturing debt are finding themselves in the same position they were when the loan originated. And how a debt fund reacts to a potential default will vary based on the health of the property and the borrower. 

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