Lender Distress Is the Opportunity: Takeaways From the 2026 Alt Asset Summit

Last week Neighborhood Ventures co-founders Jamison Manwaring and John Kobierowski joined Directed IRA CEO Mat Sorensen for a fireside chat at the sold-out Alternative Asset Investor Summit in Costa Mesa. The session, "Multi-Family Investing in 2026: Lender Distress and Investor Opportunity," made one argument. Apartment fundamentals are improving at the same moment many capital stacks are failing, and that combination is when disciplined buyers get paid.

The Supply Wave Is Receding

Jamison opened with the backdrop. Three years of heavy construction kept Sun Belt rents flat, but new building has fallen to its slowest pace in roughly seven years, he said, and rents are moving up for the first time in three years. Starts in buildings with five or more units ran at an annual pace of 349,000 in September, down 25.9% from a year earlier, per the Census Bureau. Demand never left. Phoenix absorbed 12,741 units in the first half of 2026, its strongest six months since at least 2000, according to Cushman & Wakefield.

The Rate Cap Clock Ran Out

John explained why good buildings are failing. Many 2021 to 2023 purchases used floating-rate loans with rate caps, insurance that held the effective rate down for about two years. Once those caps expired, he said, some owners saw effective rates climb from the low 3s to 10% or 11%, and debt coverage no longer supports a refinance. Lenders spent two years extending and pretending, and Jamison said those bills are now coming due. NMHC's October survey found borrowing conditions at their worst since 2023, per CRE Daily.

Sellers Are Reaching Acceptance

Jamison compared distressed sellers to the stages of grief. Owners, and often their lenders, only transact once they reach acceptance. Lenders that take a property back typically want it off their books within a month or two, he said, once they realize they are not set up to run it. Neighborhood Ventures is now on its sixth distressed purchase, bought before foreclosure, at a trustee sale, or directly from lenders. The firm values a building on the cash flow it produces today at today's rents, not on what the seller owes, and John said that has meant buying at 30% to 50% below the previous sale price.

Fewer Buyers Than You Would Expect

Why are more buyers not chasing those discounts? John pointed to volume. Only 29 Phoenix apartment properties with 100 or more units have sold this year, matching Cushman & Wakefield's third-quarter sales summary, and he said roughly half were new developments whose builders could not secure permanent debt. Meanwhile, the operators who would normally compete for these deals are busy fixing their own portfolios.

Buy at Seven or Eight on the Clock

On timing, Jamison borrowed an analogy from his Goldman Sachs days. Picture the market as a clock with the peak at 12 and the trough at 6. Nobody hits either exactly, so the goal is to buy around 7 or 8 once conditions are clearly turning and sell around 10 or 11. He believes multifamily has moved past 6. Both founders said the firm is holding properties it could sell today because this is a better time to buy than to sell.

It Is a Submarket Story

In the Q&A, an attendee pushed back that Phoenix rents have been falling. John said Phoenix is an east versus west story. Much of the new supply landed on the west side, while the east side has held flat or risen slightly. He said the firm's east side properties are seeing roughly 3% to 4% rent growth this year, while metro asking rents are down 0.9% year over year, per Kidder Mathews. On water, he noted that new Phoenix-area subdivisions must demonstrate a 100-year assured supply, and Arizona uses about 3% less water than it did in 1957, per the Central Arizona Project.

The Bigger Picture

Supply is falling, demand has held, and owners who bought near the peak with short-term debt are running out of road. That leaves well-located buildings trading from motivated sellers while competition for them stays thin.

For Neighborhood Ventures, this is why we are leaning in while others pull back. We largely sat out 2022 and 2023 when prices stopped making sense, and that discipline lets us buy well-located Phoenix and Texas communities from lenders today at a basis far below what the last owner paid. That's the kind of setup we want to be transacting in.