What family offices should ask before accepting a business plan that depends on capital markets cooperating at a single moment in time.
A business plan can be sound at the asset level and still rest on one assumption that has nothing to do with the asset.
For most of the last cycle, that assumption had a name: the year three refinance. The structure was close to universal. Acquire the asset with three to four years of bridge debt. Execute the value-add. Stabilize the rent roll. Refinance in year three into long term agency debt, return the bulk of limited partner capital at the refinance, then hold the remaining position for cash flow until exit. Many offering decks presented a return of 70% to 100% percent of investor capital at that refinance, with the residual position framed as something close to a free option on appreciation.
On paper it was elegant. The refinance unlocked capital, validated the operating plan, and reset the deal onto cheaper long-term financing.
It worked because four conditions held at once. Rent growth was real. Valuations were rising. Agency debt was cheap. And the refinance proceeds covered the original loan plus enough margin to return capital. The model assumed all four would hold for three years. They did, until they did not.
When rents flattened, stabilized net operating income came in below the pro forma. Lower income produced a lower appraised value. A lower value sized the new loan smaller than projected. At the same time, rates rose sharply, which compressed the loan-to-value an agency lender would offer at any given debt service coverage ratio. The math collapsed from two directions at once. A refinance designed to return capital became a refinance that required capital. Some sponsors issued capital calls to close the gap. Some extended the bridge debt at higher rates and worse terms. Some negotiated forbearance. Some defaulted.
This is not a forecast. It is the environment the market is now working through. According to the Mortgage Bankers Association, roughly 875 billion dollars in commercial and multifamily mortgage debt is scheduled to mature in 2026, about 17 percent of the roughly 5 trillion dollars outstanding. The Kaplan Group, analyzing the prior year, estimated that only about half of the loans that matured in 2025 were paid off in full, and warned that close to half of apartment properties may struggle to refinance at sustainable terms. The strain shows up by lender type. As of late 2025, the multifamily delinquency rate on securitized loans had climbed past 6%, while Fannie Mae multifamily delinquencies remained well under 1%. Much of the pressure traces back to the floating rate bridge loans written in 2021 and 2022, many of which have already been extended and whose rate caps expire before the loans themselves come due, according to CRED iQ.
The Federal Reserve has provided only partial relief. Even after the policy rate moved down from its 2023 peak into the mid 3% range, borrowers are refinancing coupons that were locked near 3 to 4% into rates well above that. Cheaper than the peak is not the same as cheap.
The structural lesson is not that bridge debt is bad, or that value-add is bad. The lesson is that any business plan whose viability depends on a refinance at a specific moment in time is a business plan dependent on capital markets cooperating at that moment. That is not a deal-level risk. It is a macro-level risk embedded inside a deal-level structure, and for most investors it was never priced that way.
For a family office, this distinction is not academic. Capital meant to compound across generations is the capital least able to afford a forced decision at the wrong moment. A timing-dependent structure concentrates macro exposure at a single point on the calendar and quietly removes the family’s room for error. Liquidity becomes the assumption no one underwrote. When the refinance does not arrive on schedule, the choices that remain (contribute more, accept dilution, or absorb a loss) are rarely the choices a steward would have made freely.
So the diligence question is harder than it first sounds, and it is not a question about the sponsor’s track record. If the refinance does not happen on the projected timeline, what is the deal still worth. Not what the sponsor projects. What the math actually shows under a scenario where the refinance pushes out two years, or does not happen at all. A plan that survives only in the refinance case is not a real estate investment with refinance upside. It is a bet on capital markets with a building attached.
If the deal only works in the refinance case, the deal is the refinance. Everything else is window dressing.
Durability is the ability to survive a delay you did not choose. For those allocating patient capital, refinance dependency belongs in the underwriting as a macro exposure, not in the footnotes as a timing detail. Families that price it that way are usually the ones buying in the next cycle, not the ones being sold.
How are you weighing refinance dependency in the structures you are evaluating now, and where do you draw the line between an acceptable assumption and a hidden bet?
Vessi Kapoulian
Protect the downside. Grow your wealth. Build wisely across generations.
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Sources:
Mortgage Bankers Association, 2026 commercial and multifamily mortgage maturity estimate.
The Kaplan Group, State of U.S. Business Debt, 2025 payoff rate and apartment refinancing outlook.
CRED iQ, securitized and bridge loan maturity data.
Reporting on the 2026 maturity wall via Multi-Housing News and Reed Smith.
Federal Reserve policy rate path per public reporting.