Marcus Duley, Walker & Dunlop Investment Partners

The multifamily sector is emerging slowly from a cyclical trough, marked by improving fundamentals but lingering imbalances—a set of dynamics we believe is creating compelling opportunities in senior bridge lending and value-add/opportunistic equity.

After a period characterized by oversupply and modest performance, key indicators such as national vacancy rates, absorption levels, and new supply point to a market moving towards growth.

At Walker & Dunlop Investment Partners (WDIP), we view this as opportunity for disciplined capital deployment. Through our senior bridge lending and value-add/opportunistic equity strategies, we aim to deliver risk-adjusted returns by leveraging our market insights and rigorous investment process.

Market outlook: Multifamily recovery gaining momentum

Multifamily vacancy declined to 8.1% in Q3 2025, marking six consecutive quarters of absorption exceeding 100,000 units. Concurrently, new supply is slowing markedly: annual deliveries are forecasted to decline by approximately one-third over the coming year, and new construction starts remain near decade-long lows.

By Q4 2025, net absorption is expected to surpass net deliveries for the first time since early 2022, signaling a market transitioning toward more balanced conditions that may benefit well-positioned investors.

Bridge lending in multifamily: Income and downside protection

WDIP’s senior bridge lending strategy focuses on short- to medium-term, senior-secured loans on multifamily properties exhibiting improving fundamentals. We apply conservative leverage—typically 65–75% loan-to-value—and implement protective loan structures including covenants, cash management, and interest rate caps.

As rent growth strengthens and development moderates, senior bridge lending presents an attractive combination of income generation and principal protection.

Multifamily equity: Driving value and growth

Our value-add and opportunistic equity strategy focuses on:

  • Properties where operational or capital inefficiencies can be addressed, particularly in markets with strong underlying demand.
     
  • Assets that qualify for affordable housing programs, benefiting from significant real estate tax abatements.
     
  • Development opportunities in select growth markets with limited supply constraints.

These approaches aim to capture long-term capital appreciation amid improving market fundamentals.

Supply, demand, and rent trends

Q2 2025 net deliveries fell nearly 30 percent year-over-year, with projections under 75,000 units by Q4, the lowest level in over a decade. Vacancy is forecasted to dip below 8.0 percent by year-end, and rent growth is expected to rise into the mid-1 percent range.

Markets with limited new supply, like San Francisco, San Jose, and Chicago, are already seeing rent growth between 3.9 percent and 5.5 percent. Meanwhile, oversupplied Sun Belt metros are beginning to stabilize as deliveries slow.

Two complementary strategies, One market opportunity

WDIP is pursuing two distinct but complementary strategies that respond to the same set of evolving multifamily market dynamics: tightening vacancies, slowing supply, and improving rent trends.

  • Senior bridge lending targets stabilized and transitional multifamily assets through short- to medium-term, senior-secured loans. Conservative leverage, strong structuring, and improving fundamentals support income generation and downside protection.
     
  • Value-add/opportunistic equity focuses on long-term growth by acquiring or developing assets with untapped potential—whether through operational improvements, participation in affordable housing programs, or select ground-up projects in high-demand markets.

Each strategy approaches the opportunity differently—one through income-oriented debt, the other through growth-focused equity—but both supported by a rigorous, research-driven underwriting process and executed by an experienced team committed to value creation and risk management.

Talk to our team about multifamily investment opportunities

The current phase of the multifamily cycle presents one of the most attractive opportunities we’ve seen in years. WDIP is prepared to act with discipline and confidence, capitalizing on market conditions, while protecting investor capital.

Interested in learning more about our multifamily investment strategies? Contact the WDIP team today.
 

This presentation is for informational purposes only. Nothing herein is an offer or solicitation for the purchase or sale of any security and may not be relied upon in connection therewith. Investment advisory services offered through Walker & Dunlop Investment Partners, Inc. (WDIP). Private real estate investments involve risk of loss; past performance is not indicative of future results. WDIP investment strategies are available only to sophisticated accredited investors. Any opinions and forward-looking statements that of the presenters are subject to change.