PGIM and Citymark Bet on Multifamily Debt as Refinancing Wave Looms

Capital is flowing into the market in search of opportunities in the multifamily sector as more than $650 billion in multifamily debt is scheduled to mature between now and 2026.

This week, PGIM Real Estate and Citymark Capital formed a joint venture partnership to deploy $500 million in dedicated capital to acquire senior loans or other structured positions backed by multifamily assets. The program is targeting debt currently held by banks that are facing increased regulatory pressure, higher interest rates and tightening capital standards.

The partners intend to acquire both performing and nonperforming loans where collateral is supported by recovering sector fundamentals. This flexibility will allow the pair to capitalize on various opportunities in the multifamily debt market, including stable income-producing assets and distressed properties that need more attention.

Multifamily rent growth is expected to increase throughout 2025, as supply drops by more than 50% over the next two years, and as demand for rental housing remains strong, driven in part by the high cost of homeownership for many Americans, the firms noted.

“People that are renting and are trying to buy a home are having a tough time,” Citymark Capital CEO Daniel Walsh said in a Bloomberg article about the partnership. “Apartments are generally staying full in the near term.” Walsh noted the partners don’t foresee massive discounts on loan sales but expect a little bit of capital to be needed to bridge the gap until the interest rate environment improves.

PGIM and Citymark’s partnership is one of many seeking to fill a financing void for property owners looking for refinancing options as banks and traditional lenders pull back from commercial real estate lending.

“Over the next 18 months we expect to see a large volume of multifamily loans coming to the market,” said Soultana Reigle, head of U.S. Equity and senior portfolio manager for PGIM Real Estate’s Value-Add Strategies. “We believe that our deep experience and capabilities in the residential sector will allow us to take a partnership-like approach to identifying creative capital solutions for banks that also provide attractive opportunities for our investors.”