In this quarter’s edition of Capital Conversations, MONTICELLOAM, LLC Principal Thomas Lally and Senior Managing Director, Charles Ostroff share their insights on today’s interest rate volatility, sponsor behavior, and where they can find stability in a shifting market.  

Coming off the heels of conference season, many stakeholders were cautiously optimistic for 2025.

With market volatility spurred by tariff announcements, how have they reacted? 

Charles: I might sound like a broken record, but the multifamily industry remains in a “wait-and-see” mode, especially given the ongoing volatility in interest rates. Fundamentals were beginning to trend upward, but macroeconomic uncertainty—particularly around tariffs—has made it difficult for both sponsors and lenders to confidently price deals. 

Earlier this year, we saw strong deal activity at the term sheet stage. What’s less clear is how many of those have actually closed. We’re just through Q1, so the data isn’t all in yet, but I wouldn’t be surprised if there’s a noticeable gap between deals signed and deals closed. 

Tom: Right, Charles. If you quote them a deal today, give them a term sheet, and they end up signing, that deal’s not going to close for a while. In a volatile environment like this, both sides are stepping back to reevaluate pricing and structure. 

From my experience, those who are well-capitalized or holding cash-flowing assets have the luxury of patience. No one wants to be the first one through the door if they believe terms should improve. If writing a check isn’t urgent, most are content to sit tight and wait. If they don’t have to write a check, they’re okay with waiting things out. 

What makes a borrower well-positioned in today’s market? 

Tom: In these periods, strong borrowers tend to lean on experience and discipline. They know when to act and—more importantly—when to wait. They’ll simply put their hands in their pockets, wait for something to fall off the tree, and then pick it up.  

There’s no substitute for having lived through prior cycles. That experience builds intuition and the ability to recognize the early signals others might miss. 

Charles: Absolutely. As a lender, confidence comes from working with sponsors who bring a deep understanding of the asset, the market, and the business plan. Operators who are expanding into a new market right now carry a different degree of risk than those who are doubling down on what they know and have proven.  

With all the swirl happening in the sector, where can stability be found?  

Charles: Through building and strengthening relationships. Everyone is feeling the effects of this market and it’s something we can’t control. What I can control is the effort I put in to meet face-to-face with peers. It creates a whole different atmosphere when you sit down and break bread with them. I can send out 100 emails in a morning, but at the end of the day, this business has been built on a foundation of seeing an individual eye-to-eye and shaking hands. 

Shifting a bit, I’ve seen owner-operators take advantage of the lower-activity environment by focusing on internal processes. They’re using this time as an opportunity to improve efficiency—implementing new technologies like AI—so that when activity picks up, their operations are ready to scale. 

Tom: Charles, you’re spot on. It’s about the person behind the deal. Whether you want to call it stability, confidence, or comfort, being able to know and understand who you’re partnering with creates that unspoken agreement that we’re all on the same page. 

Markets go through cycles, but the people you align yourself with endures. I think that’s the intangible piece to preserving a long career. We work with partners we trust, so that when things turn volatile, they’re not the type of people snub you for their own personal gain.  

Along the way, you survive, accumulate experience, and hopefully a bit of wisdom.

Have a topic you’d like Tom and Charles to discuss? We invite you to share your ideas by reaching out.