An apartment property that could support roughly $15 million of debt when interest rates were around 3.5% might qualify for only about $10 million refinanced around 7% today, leaving the owner to produce another $5 million, find a new source of capital or sell. Matt Chadwick, head of acquisitions at Tampa-based Ally Capital Group, is increasingly watching that problem land in front of owners as loans taken out during Tampa Bay’s apartment boom come due.
Rising rents, climbing property values and cheap debt made increasingly expensive apartment acquisitions work in 2021 and 2022 even when the cash flow was thin and the deal depended on rents continuing to rise. Tampa Bay then added thousands of apartments, rent growth slowed and the five-year loans behind many of those purchases started reaching maturity…