Multifamily Value-Add, Stress-Tested
Elmwood Terrace Apartments
A 120-unit value-add where the bridge-loan exit assumptions hid most of the risk.
Multifamily Value-Add, Stress-Tested
Elmwood Terrace Apartments
A 120-unit value-add where the bridge-loan exit assumptions hid most of the risk.
Client
Confidential — Regional Sponsor
Client
Confidential — Regional Sponsor
Location
Austin MSA, TX
Location
Austin MSA, TX
Industry
Multifamily
Industry
Multifamily
Timeline
48-hour turnaround
Timeline
48-hour turnaround
A regional sponsor was underwriting a 120-unit value-add on bridge debt. We modeled fixed, floating, and assumption financing side by side.
Under every realistic rate path except a sharp decline, the exit fell short of the sponsor’s minimum return. We returned a Conditional verdict tied to a lower basis.
A regional sponsor was underwriting a 120-unit value-add on bridge debt. We modeled fixed, floating, and assumption financing side by side.
Under every realistic rate path except a sharp decline, the exit fell short of the sponsor’s minimum return. We returned a Conditional verdict tied to a lower basis.
Key Highlights:
A sponsor brought us a 120-unit multifamily value-add underwritten on an aggressive bridge-to-permanent exit. We stress-tested the capital stack the way a lender — and a downturn — actually would.
Renovation premiums and absorption pace re-underwritten against the submarket
Bridge, fixed, and floating financing modeled side by side
Refinance and exit assumptions tested across a range of rates
Debt-service coverage re-checked on the real, not pro forma, NOI
Key Highlights:
A sponsor brought us a 120-unit multifamily value-add underwritten on an aggressive bridge-to-permanent exit. We stress-tested the capital stack the way a lender — and a downturn — actually would.
Renovation premiums and absorption pace re-underwritten against the submarket
Bridge, fixed, and floating financing modeled side by side
Refinance and exit assumptions tested across a range of rates
Debt-service coverage re-checked on the real, not pro forma, NOI
Challenges
On paper the deal only worked because the exit assumed a refinance at yesterday’s rates. The bridge structure concentrated the risk at the worst possible moment.
Key Challenge Points:
Exit cap and refinance rate assumed flat through the hold
Renovation premium assumed full, immediate absorption
Bridge maturity landed before stabilized cash flow could support a take-out
Challenges
On paper the deal only worked because the exit assumed a refinance at yesterday’s rates. The bridge structure concentrated the risk at the worst possible moment.
Key Challenge Points:
Exit cap and refinance rate assumed flat through the hold
Renovation premium assumed full, immediate absorption
Bridge maturity landed before stabilized cash flow could support a take-out
Results
Modeled across three financing structures, the deal needed roughly 180 bps of rate cushion to clear its own debt service. We returned a Conditional — workable, but only with a different capital stack and a longer runway.
Results:
3 debt scenarios modeled head-to-head
Roughly 180 bps of rate cushion required to clear DSCR
Bridge-exit risk surfaced before closing
Verdict: Conditional
Results
Modeled across three financing structures, the deal needed roughly 180 bps of rate cushion to clear its own debt service. We returned a Conditional — workable, but only with a different capital stack and a longer runway.
Results:
3 debt scenarios modeled head-to-head
Roughly 180 bps of rate cushion required to clear DSCR
Bridge-exit risk surfaced before closing
Verdict: Conditional
Related Case Studies
See
How
We
Re-Underwrite
Every
Asset
Class
Browse more deals we rebuilt from the ground up — each re-underwritten to a clear Proceed, Conditional, or Walk Away verdict.
Related Case Studies
See
How
We
Re-Underwrite
Every
Asset
Class
Browse more deals we rebuilt from the ground up — each re-underwritten to a clear Proceed, Conditional, or Walk Away verdict.
