After outlining what happened and why the market turned so quickly, this update focuses on the leadership decisions and operational actions taken to reduce losses and protect investor value during one of the most challenging real estate cycles in decades.
Context Matters: Timing and Market Reality
Approximately 80% of the portfolio was acquired in 2021 and 2022, during peak pricing and a period when floating-rate debt was inexpensive and widely available. These assumptions were shared across the industry.
When the market reversed, they collapsed rapidly.
Following eleven interest rate hikes in seventeen months, debt costs tripled just as new supply surged and demand softened. The value-add model that had performed well for years became unworkable under the new cost structure. At that point, leadership priorities had to shift decisively from growth to capital preservation.
Early Action and Transparent Communication
By Q2 2023, as pressures intensified, leadership made the decision to pause distributions across more than 40 properties and suspend construction and asset management fees on assets that could no longer support them.
These decisions were difficult but necessary to conserve liquidity and stabilize operations.
From that point forward, the organization prioritized transparency—providing frequent updates and broad access to financial information through the investor portal, including monthly reporting and general ledger access for each asset. This approach ensured investors had clear visibility into performance and decision-making throughout the downturn.
Industry-Wide Pressure and Portfolio Impact
By late 2023, approximately 80% of the portfolio was under financial distress. This was not unique. The broader floating-rate multifamily sector experienced widespread disruption, affecting operators of all sizes. Many did not survive the cycle.
Across the portfolio, asset values declined 30% to 50% from acquisition, and in numerous cases, properties were no longer worth the outstanding debt. Every asset acquired during 2021 and 2022 was impacted by these market conditions.
Portfolio-Level Actions to Reduce Losses
Throughout 2023 and 2024, teams worked asset by asset to reduce losses and preserve investor value wherever possible.
During this period, approximately 20,000 units were sold or recapitalized, recovering an average of 30% of invested equity, with select assets recovering as much as 90%, despite extremely constrained market conditions.
To support these efforts, ownership contributed significant personal capital—approximately $25 million—toward debt service and operating expenses. This funding helped maintain operations and provided additional time to pursue restructuring, sales, or recapitalization strategies rather than forced outcomes.
A Consistent Decision Framework
As liquidity pressures mounted, particularly on assets acquired during the peak cycle, leadership followed a disciplined framework—exhausting all viable alternatives before surrendering any asset:
- Issuing capital calls or contributing additional capital when appropriate
- Working with lenders to secure modifications or extensions
- Selling assets opportunistically to recover equity
- Bringing in new equity partners to restructure capital stacks
While these outcomes would not be considered successes in a normal market, they consistently produced better results than full equity loss under the circumstances.
Only after all viable options were exhausted were deeds in lieu of foreclosure pursued—and only where assets were so far underwater that no alternative solutions existed.
Stability Through Accountability
The organization did not walk away from challenges. Decisions throughout this period were guided by loss mitigation, investor protection, and operational integrity during an unprecedented real estate environment.
Today, the portfolio is smaller and more focused, consisting of approximately 5,000 units across 35 properties, supported by 150 employees, and positioned for stability as market conditions normalize.
In recent months, several misleading narratives have circulated regarding both the organization and its leadership. These will be addressed directly in the next update.
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