Hello Friends and Investors,

It’s hard to believe we’re nearly at the halfway mark of 2025. The first five months of this year have provided clarity on several fronts: how the market is adjusting to elevated interest rates, how demand for multifamily housing is evolving, and where new opportunities are beginning to emerge. In short—the Midwest multifamily market remains resilient, but it’s a market that rewards discipline. We’re seeing both encouraging stability and some headwinds to navigate carefully as we look ahead to the second half of the year. Below is a snapshot of the key trends shaping our strategy moving forward.

Market Overview

Market Trends at Mid-Year

Occupancy & Rent Growth:
Midwest Class A/B suburban assets continue to outperform many U.S. markets in terms of occupancy and rent growth. As of May:

• Occupancy remains strong across Louisville, Indianapolis, Columbus, and Cincinnati at 93–95%, with suburban product seeing the most consistent demand.
• Rent growth is holding steady in the 4% YOY range, continuing to outpace the national average of ~1%.

Absorption:
Net absorption in the Midwest remains healthy and above national trends, driven by steady job growth and in-migration from more expensive markets. Suburban submarkets are absorbing new supply well, while some urban core areas are seeing slower lease-ups due to affordability gaps.

Supply & Construction:
New starts are slowing. Rising construction costs, volatile financing, and elevated interest rates have caused many developers to delay or cancel projects. We expect the supply pipeline to materially contract after late 2025, which will further strengthen fundamentals for existing assets heading into 2026–2027.

Capital Markets:
Financing remains expensive, but interest rates appear to have peaked. The market anticipates potential Fed rate cuts later this year, which could help improve debt terms by 2026. Cap rates in Midwest markets remain 5.25% to 6.25%, offering attractive relative yields.

How We’re Adjusting Our Strategy for H2 2025

Acquisitions:
We are taking a high-conviction, selective approach. We continue to prioritize off-market and value-driven opportunities where pricing reflects current realities—not 2021 expectations.

• We’re most focused on suburban Class B with value-add potential, where demand remains sticky, and new supply is limited.
• Replacement costs have risen so sharply that buying existing assets well below replacement cost remains compelling.

Operations:
Operational execution is more important than ever in this environment:

• We are laser-focused on driving NOI through improved leasing, renewals, expense control, and asset-level KPI tracking.
• Resident retention is a key focus, as some tenants are more cautious given broader economic uncertainty.

Capital Markets & Financing:
We are actively working on several refinancing initiatives to position properties for longer-term holds and enhanced cash flow while navigating to more favorable exit conditions.

Patience is key: We are not forced sellers. With stabilized assets at extended financing terms, we can time future exits to align with stronger capital markets.

Exits:
With cap rates still elevated and buyer demand selective, we are not pursuing near-term exits unless pricing achieves close to underwritten returns. The better path for most assets today is to optimize performance, refinance where advantageous, and target exit in a more favorable cycle (2026–2027+), when interest rates and transaction velocity are likely to improve.

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.

Active Opportunity

Coming Soon! We have an active high-yield lending deal secured by quality real estate coming soon. We'll be announcing more details to the investor base soon.  Stay tuned!

CF In the News

MULTI-HOUSING NEWS

Multifamily Investors. Buying Time?

At the beginning of 2025, multifamily investment was set up for another strong year, with investors more interested in assets across a wider range of markets than than at any point since the rate hikes began in 2022. Check out where CF Capital's Tyler Chesser opined on the market. Read More

MULTIFAMILY DIVE

How Investors are Closing Deals Despite Treasury Volatility.

In the three years since the Federal Reserve began hiking interest rates, apartment buyers and sellers have grown accustomed to dealing with volatility when underwriting deals. Tyler also contributed to this article - check it out. Read More

Featured Articles

REALPAGE - Midwest Region Leads U.S. in Rent Growth in April

The Midwest has led the nation for rent growth in recent years, straying from the region’s “slow and steady” reputation. As of April 2025, the Midwest reported the highest annual rent growth of any region nationwide at 3.6%. That was notably ahead of the U.S. average of 1%. Read More

CRE DAILY - CRE Recovery Holds, but Maturity Walls and Distress Loom

CRE transaction volumes have continued rebounding in 2025, but distress levels and loan maturities suggest turbulence. Read More

CF Capital Updates

A Personal Note from the Team

It’s been a busy spring not only for the markets but for our team personally—and we wanted to share a few happy updates from the CF Capital family:

• The Chesser Family welcomed their third child—a healthy baby boy—in May! Mom, baby, and family are all doing great.
• Bryan’s middle son graduated kindergarten and is ready for first grade in the fall.
• Rachael’s youngest also graduated kindergarten, and her oldest finished 5th grade and is headed to middle school.
• Leslie’s son wrapped up his 3rd year at Tulane University and is already planning his senior year.
• Dan’s sister graduated from undergrad at the University of San Diego—an exciting milestone for their family.

We’re grateful to work alongside such a talented and close-knit team, and it’s special to celebrate these personal milestones alongside our professional growth.

Quote of the Month

"Soon is not as good as now."- Seth Godin

Looking Ahead

As we move into the back half of 2025, we remain confident in the long-term fundamentals of the Midwest multifamily sector. Demand is steady, new supply is slowing, and while the capital markets remain choppy, signs point to a more favorable environment emerging over the next 12–24 months.

At CF Capital, we will continue to lean on discipline, operational excellence, and strategic patience—a recipe we believe will generate strong long-term results for our investors.

As always, we appreciate your trust and partnership. If you’d like to discuss the market or any of our current strategies in more detail, we’d welcome the conversation.

In Partnership, Tyler & Bryan