Sep. 12 at 1:09 PM
$ABR When the Fed hikes rates, the monthly interest burden on ABR's multifamily borrowers spikes . This compresses their debt service coverage ratios (DSCR) and increases the likelihood of delinquencies.
Blocked Exit Strategy (10-Year at 5%): ABR’s core strategy is "bridge-to-agency"—holding transitional loans until the borrower stabilizes the property and refinances into a permanent loan. A 5% 10-year Treasury drives up permanent mortgage rates and cap rates (which lowers property valuations). Borrowers become trapped in expensive bridge loans because they cannot qualify for a permanent refinance, leading to a surge in maturity defaults.
Agency Business (GSE Origination & Servicing)
Agency loans are typically priced at a spread over the 10-year Treasury. A 5% yield makes long-term financing highly expensive, which suppresses commercial real estate transactions and refinancing activity. This directly reduces ABR's origination volume, and loan sale premiums
Good news all over 👍
