PGIM’s Stephanie Wiggins Discusses Financing Challenges and Opportunities Facing Texas Transactions on the Heels of the Connect Texas Multifamily

News| September 5, 2025| Mike Boyd

For the past few years, the road has been rocky for multifamily investors and lenders. With signs that the headwinds may be lessening, PGIM’s Stephanie Wiggins provides her perspectives on what we might see moving forward. 

From an investor’s standpoint, how has underwriting of multifamily acquisitions become more complicated? 

There is no such thing as a plain vanilla deal anymore. Deals have become more complicated especially with continued market uncertainty including rising cost of capital driven by interest rate volatility; significant increases to staffing/real estate taxes/insurance costs; and quickly changing due diligence requirements. In addition, although the investment sales market is showing signs of improvement, there are still many buyers and sellers that have not had a “meeting of the minds” regarding valuations and sale prices. All of these conditions are stressors on the underwriting and analysis of multifamily opportunities. 

From a lender’s standpoint, has underwriting for multifamily properties, whether acquisition, development or refinancing, grown stricter or more lenient compared to a few years ago? 

The pipeline is becoming much more equally yoked between refis and acquisitions. Despite the stressors mentioned previously, the abundance of capital in the market have instigated more favorable terms. We heard from both Fannie and Freddie that they want to “win” and we are seeing more 1.25 debt service coverage ratios and 35-year amortization for good deals with good sponsorship. These relaxed criteria have been huge drivers of agency business as they are helping bridge the gap in proceeds and support deal viability. 

What acquisition strategies are you seeing more of among your clients? 

They seem to be targeting assets early in their life cycle, including properties still in lease-up, because they’re trying to capture potential upside and negotiate favorable pricing. More clients are interested in acquiring newly built properties, even during the construction stage. 

In addition, there has definitely been an uptick in older, value-add deals changing hands. This has been driven by recapitalization needs, fund life cycle constraints, or shifting sponsor priorities and business models. It’s also a cheaper price point. 

What financing challenges are clients bringing to you and your team today that weren’t as common before the Fed began its rate increases? 

In some cases, sponsors are being forced to bring more equity to the table, or to seek more expensive mezzanine solutions, and so we’re seeing a lot of cobbling together of different resources, which, quite frankly, at times, raises the cost of capital. Valuation uncertainty and rapid swings in the 10-year Treasury are making it difficult to price deals accurately, which is complicating both acquisitions and refis. 

But in the end, innovation and creative structuring typically prevails. We’re seeing lots of innovation in how bridge loans are being structured and hybrid capital stacks, and so it’s pretty exciting.