Equity Bottlenecks Stall Multifamily Sales Amid Rising Debt

By Megan Brooks 28/08/2026 4 min read 9 views

Equity hurdles are slowing multifamily transactions even as debt capital flows freely across the sector. This imbalance creates a bottleneck that continues to stall deal volume, despite lenders aggressively competing for business. Panelists at GlobeSt.’s Multifamily Owners Summit in Tampa said the market isn’t constrained by a lack of money, but rather by a shrinking pool of opportunities that satisfy increasingly selective investors.

Lenders currently have numerous capital sources competing for business, but equity partners are applying stricter underwriting standards and demanding clearer paths to returns. This disconnect reflects broader uncertainty around pricing and returns, which continues to stall investment decisions. Even so, Karam pointed to strong long-term fundamentals for multifamily, with some investors continuing to deploy capital selectively.

“There are people going all in on our space,” he said. “There are a lot of reasons to understand and believe that there will be great returns over the next three to four years.” Still, those investors are setting a much higher bar. Deals must stand out not only on fundamentals but also on how clearly they articulate a path to performance.

“Every story has to be special,” Karam said. “Even the special stories have to be special, otherwise investors will say no.” This pressure is contributing to a growing gap between capital raised and capital deployed. Brian Soss, managing director of acquisitions at RangeWater Real Estate, said that people want to put money out and have a lot of capital raised. They want to find unicorn deals and they want groups like us to go find them. A lot of times, though, you find those deals and they find a way to kill it.

Operators Must Evolve to Win Financing

As equity becomes more difficult to secure, operators are being forced to sharpen how they present opportunities. Traditional value-add strategies are no longer sufficient to win over investors in a crowded and competitive environment. “You have to learn how to storytell, and it has to be more than the traditional, ‘we’re going to change cabinets and flooring,'” Soss said. Competition is also intensifying as investors move across the risk spectrum in search of yield.

Buyers that historically avoided older assets are now actively pursuing them, adding pressure on traditional value-add operators already struggling to secure equity. “It is pushing you further down the risk spectrum,” Soss said. While most of the market is grappling with these constraints, some segments are seeing fewer obstacles. Neal Drobenare, senior vice president of acquisition and development at The NHP Foundation, said affordable housing continues to attract strong demand, particularly in tax-exempt financing structures where capital remains plentiful.

“We have had five times the number of buyers than bonds available in a recent deal,” Drobenare said. That demand has allowed NHP to move quickly, even as conventional multifamily transactions face delays tied to equity sourcing. “We have been able to execute and get deals done in under three months and we haven’t had any problems going to the market and getting that capital,” he said. Still, for most sponsors, access to capital is only part of the equation.

Whether a deal gets financed increasingly depends on how well it aligns with investor expectations around risk, returns and differentiation. “Capital is still out there, but it is still very difficult to get some deals capitalized,” said Chip Wooten, senior vice president of debt capital management and asset sales at Hillpointe. “If you have a unique offering, it is easier.” Wooten said Hillpointe has leaned more heavily on private capital, particularly given its focus on secondary and tertiary markets and smaller deal sizes. Institutional investors remain active, but many are still recalibrating return thresholds, further slowing execution.

“Institutional investors are still showing up on the bid sheet,” he said. “But they are still determining where the returns need to be.” Across the panel, the message was consistent: debt may be readily available, but equity discipline is dictating which deals move forward. Until pricing stabilizes and more opportunities meet those stricter criteria, transaction volume is likely to remain constrained.