As inflation retreated, the small multifamily sub-sector closed 2022 in a position of strength, with originations reaching their second-highest level, just behind 2021’s record high. Even as cap rates begin inching higher, the sector appears to be fortified from economic reverberations, Arbor’s Small Multifamily Investment Trends Report Q4 2022 shows.

Key Findings:

  • Small multifamily originations reached $80.7 billion in 2022, the highest annual total after 2021’s record high.
  • Cap rates inch higher from record lows, ticking up to 5.1%.
  • Debt yields rise and loan-to-value ratios (LTVs) hold near post-pandemic lows as lending standards remain tight.

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