AGW Capital

Last week, I received great feedback from friends and colleagues who find my posts insightful. I’m grateful to share my experiences with this community and provide lessons that might be helpful to others. Today, I’m focusing on rental insurance solutions that have evolved over the past few years. Back in 2018, I was introduced to an early solution allowing landlords to require rental insurance from tenants instead of a security deposit. The appeal was simple: landlords gain peace of mind, while tenants avoid locking up 1-2 months’ rent in deposits, instead paying a small monthly fee. Initially, I was skeptical—wondering how a startup could support these obligations and how banks would feel about losing traditional deposits. However, New York’s 2019 legislation limiting security deposits to one month made this solution more compelling. Over time, I even advised larger owners on self-insurance options—charging a similar fee and setting up a self-insurance fund across their portfolios. On my Bronx portfolio, we adopted one of these solutions to cover 2-3 months’ rent, and up until 2024, we hadn’t needed to use it. But in the past two months, we’ve opened claims on two tenants: one left before the lease expired, and the other turned out to be a professional squatter. In both cases, we successfully recovered 2-3 months of rent. In the current economic climate, rent delinquencies are on the rise, so I encourage you to explore these types of solutions. They often come at no cost to the landlord but can provide significant value. At AGW Capital we focus not only on optimizing your capital stack but also on bringing your properties to operational excellence, unlocking their full potential for financing. Feel free to DM me to learn more—I’m always happy to share insights!

We’ve all been hearing about lenders Extend-and-Pretend in the past 24 months. The post-pandemic landscape has reshaped commercial real estate (CRE), and a recent report from the Federal Reserve Bank of New York by Matteo Crosignani and Saketh Prazad reveals the implications for credit availability and market stability. Some Key Insights: 1?? Banks are delaying losses: Many lenders, especially those with weaker capital positions (e.g., equity-to-debt and debt-to-deposit ratios), have been extending loan maturities on distressed CRE mortgages instead of recognizing losses. This helps protect their capital but restricts new loan origination. 2?? A growing maturity wall: As of Q4 2023, 27% of bank capital is tied to CRE mortgages maturing within three years, and 40% within five years. This “maturity wall” presents risks if property values don’t recover in time. 3?? Credit misallocation: Extend-and-pretend behavior has reduced new CRE mortgage origination by 4.8–5.3% since Q1 2022, limiting fresh loan opportunities in the sector. 4?? Remote work impacts valuations: Office property valuations have plummeted, with NYC offices seeing a 40% decline due to shifts in work patterns. This change continues to challenge urban real estate markets. 5?? Opportunities amid challenges: Investors focused on distressed assets or adaptive reuse projects (e.g., converting office to residential) may uncover value, but careful underwriting is essential given the complexity of distressed loans. No big surprises here—but the fact that the New York Fed has issued a 30+ page report on this issue signals it’s becoming a growing concern. A link to the full report will be in the first comment. I’m currently working with several groups to identify bridge and construction financing as we optimize their capital stacks in these turbulent times. DM me to exchange ideas and discuss future collaborations. PS - credit to my AI sidekick for helping me with the write up

Saving a client money isn’t always enough. I recently connected with a developer in Northern New Jersey who found himself in a tough spot. He was in lease-up on a stunning project but ran into an issue with his final release clause—he couldn’t unlock his final draw without paying contractors first, but couldn’t pay them without the draw. He needed a bridge-to-agency loan, fast. When we reviewed his existing term sheet, red flags jumped out: a high rate, lengthy minimum interest period, and an exit fee that couldn’t be waived because the bridge lender didn’t offer agency takeouts. I told him, that he can do better. We provided a solution that addressed these issues and could have saved him $500K on a $19M loan for the 6-9 months he needed until refinancing. However, the sponsor stuck with the original lender—his partner had already signed the term sheet and put down a deposit. While this deal didn’t go through, the effort wasn’t wasted. We’ll be working together on his next project, building trust along the way. At the end of the day, we play the long game. We’re here to help you maximize returns while protecting your downside.

I hate the word "oversupply." It implies a structural problem rather than a temporary, cyclical one. It confuses people who see headlines stating that, as a country, we're undersupplied by millions of homes ... and yet, at the same time, we're also somehow "oversupplied." Of course, we certainly do have more supply than demand right now. Not just in the Sun Belt. But in three-fourths of the country's 150 largest metro areas. Including places like Washington DC, New York, Seattle, Minneapolis and Philadelphia. How do we explain the "we're undersupplied of housing" narrative with this data here showing the top 20 markets for apartment demand ALL have even more supply than they have demand? It's a fair question, and one I've got quite a bit lately. But it's not that complicated. When we think about undersupply, it means there's a lot of pent-up demand for housing. -- Some of that pent-up demand is comprised of folks who have found temporary living arrangements. -- Some of that pent-up demand is comprised of households who can't find housing they can afford. -- Some of that pent-up demand is comprised of households "doubled up" and thus sharing the cost burdens, often for a contracted period of time. -- Some of that pent-up demand is comprised of young adults living with mom and dad, with varying degrees of urgency to venture off on their own. Point being: People aren't lined up on a waiting list ready to move in today for any new apartment that gets built. It takes time to unlock pent-up demand. And there are numerous factors, as well, including location and price and housing type and size. Additionally, it takes time for "filtering" to play out -- where higher-income renters move out of older, moderately priced housing into newer, pricier housing, and then lower/moderate income households move into their old housing units. And that's a multi-step process -- households from A- properties moving to A+, then Bs to A-, then Cs to Bs. All this takes time. But that demand is there, no doubt. So, no, whether we're talking about New York or Austin: We're not "oversupplied." But we do have a temporary supply/demand imbalance in some markets. Does anyone really think we'll still be talking about "oversupply" in a couple years when supply levels plunge? Doubtful, right? More likely, we'll be talking about undersupply again. Because housing supply comes in cycles, but demand is structural. #housing

???????????????? ?????? ?????????? ?????? ??????????????, ?????? ????????’???? ?????? ?????? ???????? ?????????????? ???????? ???????????????? ?? ????????????. As a borrower, it's equally important to understand who will service your loan after closing. In today’s lending environment, flexibility is key. The future is unpredictable, and your lender’s ability to adapt can make all the difference. For example: ? CMBS lenders are highly rigid because they sell loans in pools to investors. Negotiating every clause upfront—especially around springing lockbox triggers—is critical. ? Agency financing offers a bit more flexibility, but they’ll closely monitor your property, particularly around life safety repairs. ? Life insurance companies (Lifecos) may offer lower proceeds, but they’re often the most straightforward fixed-rate lenders for multifamily. ? Balance sheet bank loans provide flexibility but come with the risk of your loan being sold, which could leave you dealing with a new servicer who may not offer the same support. Banks also often require operating accounts to be managed through them, adding another layer of control. ???? ??????????, ???????? ???????? ??????'???? ???????????? ?????? ?????????? ?????????????????? ???????? ?????????????????? ???????? ????????????. ?????? ?????? ?????????? ?????? ??????????, ?????? ?????????????????? ???????????????? ?????????? ???????????????? ???? ?? ???????????????? ???????????? ???????? ???? ?????????? ?????? ?????????? ??????????????????????. #realestatefinance #lending #cmbs #multifamily #bankloans #interestRates #financialstrategy

Searching for new construction MF (sub 50 units) in Miami-Dade through St. Lucie County. All Cash buyer can close within 30-45 days.