Liquidity, Inflation Protection Draw Investors Even as Underwriting Standards Tighten

With investors now seeking inflation protection, the small multifamily sector continues to see gains. Arbor’s new quarterly Small Multifamily Investment Trends Report, published in partnership with Chandan Economics, sheds light on key trends, including firm cap rates, climbing valuations, and elevated originations, despite tightening underwriting standards.

Key Findings

  • Small multifamily originations are on pace to hit $85.1 billion in 2022, sliding from 2021’s record high.
  • Cap rates hold at 5.0%, despite rising benchmark interest rates.
  • Underwriting standards tighten as LTVs fall and debt yields tick up.

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