GAIA's Fishman warns a private credit pullback would push more apartments into distress

Danny Fishman, co-founder and CEO of GAIA Real Estate, expects more distressed apartment properties to reach the market next year as private credit funds become less willing to rescue troubled deals.

Fishman told Multifamily Dive that funds facing redemptions, a harder time raising money and higher loss ratios will be less willing to lend against real estate and to rescue deals.

The mechanism runs through interest reserves, Fishman said. Borrowers funded them when they refinanced in the past three years, underwriting lower rates and a stronger market; neither arrived, and the reserves are spent.

"Those [debt] funds saved them and basically they were kicking the can another year too," Fishman said. "And I think that comes to an end."

"They cannot go again with high leverage because they already went high to pay the interest reserve. If they have strong shareholders, they will do a capital call and bring equity. But I think a big portion will have to raise equity or sell or something."

The stress is already visible in servicing data: two 2025 multifamily loans transferred to servicing after payment shortfalls, Multifamily Dive reported. Cypress Village Apartments and The Abington face cash management, deposit account control, insurance and title issues, according to Morningstar commentary cited by Multifamily Dive.

GAIA's recent acquisitions illustrate where Fishman is buying. Two of the firm's three South Florida deals came out of development, with GAIA buying the properties and paying off construction loans; the third came from a fund at the end of its life that had to sell.

GAIA has also taken the extension route Fishman describes. As Multifamily Dive reported, GAIA and Raymond James pushed the 55 Hope loan to an August 2027 maturity on a second extension, keeping GAIA out of a refinancing market it decided not to accept. The firm renewed a Williamsburg loan for a second time.