**PGIM’s Stephanie Wiggins on the Evolving Landscape for Multifamily Investment and Financing**
Stephanie Wiggins of PGIM shares her insights into the current state and future outlook of multifamily financing and investment, especially as signs point to improving industry dynamics following several challenging years.
**Underwriting Complexities in Multifamily Acquisitions**
According to Wiggins, underwriting multifamily acquisitions has become significantly more complex. “There is no such thing as a plain vanilla deal anymore,” she notes. A host of factors are contributing to this trend, including ongoing market uncertainty, interest rate volatility, and rising costs tied to staffing, real estate taxes, and insurance.
Wiggins also points to evolving due diligence requirements and a disconnect between buyer and seller expectations regarding valuations and sale prices. These elements are putting greater strain on underwriting processes and making investment decisions more difficult to finalize.
**Shifts in Lending Practices**
From the lender’s perspective, Wiggins observes that underwriting for multifamily properties—whether for acquisition, development, or refinancing—has experienced both tightening and softening, depending on the circumstances. She explains that the deal pipeline is now evenly balanced between refinancing and acquisition activities.
Despite the economic headwinds, the availability of capital has led to more favorable lending terms. “We’re hearing from Fannie and Freddie that they want to win,” Wiggins says. As a result, agencies are offering options like 1.25 debt service coverage ratios and 35-year amortization for strong deals with reputable sponsors. These flexible terms are helping to close financing gaps and increase deal viability.
**Emerging Acquisition Strategies**
Wiggins highlights a noticeable shift in acquisition strategies among PGIM’s clients. Many are now targeting assets early in their life cycles, often during lease-up phases or while still under construction. This approach allows investors to negotiate better pricing and capture potential upside.
Additionally, the market is seeing increased activity in the value-add segment. Older properties are changing hands more frequently due to recapitalization needs, the expiration of fund cycles, or changes in sponsor priorities. These assets typically come at a lower price point, making them attractive in today’s economic environment.
**Evolving Financing Challenges**
One of the central challenges investors face today is the need to piece together more complex financing solutions. As Wiggins explains, sponsors are increasingly required to bring more equity or rely on higher-cost mezzanine financing, leading to layered capital stacks that can increase overall project costs.
Valuation uncertainty, compounded by erratic movements in the 10-year Treasury yield, further complicates deal pricing and underwriting, especially in both acquisition and refinancing settings.
Despite these challenges, Wiggins remains optimistic. “Innovation and creative structuring typically prevails,” she says. She points to new approaches in bridge loan structures and hybrid capital stacking as evidence of how the industry is adapting during uncertain times.
Stephanie Wiggins’ insights shed light on the resilience and adaptability of the multifamily financing landscape as it navigates its way forward.
