Hello Friends and Investors,

As Louisville wrapped up another unforgettable Kentucky Derby season, we’re reminded why this region is so special—not just culturally, but economically. While the world descended on Churchill Downs for the 151st Run for the Roses, our focus at CF Capital has remained steady: identifying resilient opportunities in multifamily housing across our broader region.

And the timing is compelling. We’re in a transitional phase of the real estate cycle. National headlines spotlight high interest rates, capital market uncertainty, and slower transaction volume—but on the ground in the Midwest and upper Southeast, we’re seeing strong occupancy, rent growth outpacing national averages, and early signs of a market rebound.

In the News

Midwest Multifamily Market: Resilience in the Heartland

Class A/B suburban assets in Louisville, Indianapolis, Columbus, and Cincinnati continue to perform well:

• Occupancy remains high, with Midwest averages at 93–95%, outpacing the national average (~92%).
• Rent growth averaged 2.5%–4% year-over-year—more than double the national rate (~1%).
• Demand is strong: Louisville and Columbus rank among the top 10 U.S. metros for occupancy and absorption.
• Cap rates range from 5%–6%, offering better yields—and often better spreads over borrowing costs—than coastal or Sunbelt markets.

The region’s steady job markets, in-migration, and relative affordability continue to support long-term multifamily demand.

Capital Markets & Financing: Challenging but Stabilizing

The Midwest is benefitting from its steady job markets, population in-migration, and relative affordability—all of which support long-term multifamily demand.

Interest rates remain elevated, with most agency debt pricing between 5.35%–6%, depending on leverage and structure. Still, we’re seeing encouraging signs:

• The Fed is widely expected to begin rate cuts later in 2025, which could boost values and transaction activity.
• Cap rates, which rose sharply in 2023, appear to have leveled off. Some forecasts even project modest compression by year-end.

We’re maintaining discipline in our underwriting, prioritizing deals with strong in-place cash flow and purchase prices below replacement cost.

Supply & Construction: Slowing Pipeline, Higher Costs

Construction is moderating across the Midwest—a favorable trend for investors looking 18–24 months ahead:

• Starts are down due to high interest rates and material costs (up ~30%+ since 2020).
• Recent tariffs on Canadian lumber and other materials could push costs higher, adding uncertainty and slowing new project approvals.
• With fewer new starts, especially in suburban submarkets, we expect a tighter supply environment to support future rent growth.

In the News

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We can all learn so much about living from Dan. His legacy illustrates how we too can make not only a living but also a lasting impact. The book features lessons that Ghosh, a non-profit executive and entrepreneur, has learned from 30 very different people with whom he has spent time throughout his career.

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U.S. Apartment Market Sees Strong Leasing Momentum

The U.S. apartment market saw strong momentum in new lease trade-out in the first three months of 2025. The month-over-month change in new lease trade-out ranked consistently around 1.4% in January, February and March.

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CF Capital Updates

CF Capital's Strategic Positioning

Here’s where we’re focused:

• Refinancing select assets to support longer-term holds while the market stabilizes.
• Targeting off-market and value-add opportunities below replacement cost.
• Enhancing property performance and investor reporting for greater transparency and trust.

We believe the next 12–18 months will offer some of the most compelling buying opportunities in years—for those ready to act. Our approach remains long-term, disciplined, and data-driven.

Looking Ahead

As Derby season winds down and we head into summer, our outlook remains strong for multifamily in our core markets—Kentucky, Indiana, Tennessee, and Ohio. Resilient demand, stable cash flow, and long-term appreciation make this asset class one of the most attractive places to invest today.

Thank you for your continued trust and partnership. We welcome your questions and look forward to sharing new opportunities soon.

In Partnership,

Tyler & Bryan