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Apartment landlords across the country are contending with $1.8 trillion in debt coming due over the next decade, according to a recently published Wall Street Journal report. Ari Rastegar, founder and CEO of Rastegar Capital, says his firm is no exception to that math.
The Same Math Nationwide
The Journal’s analysis, citing data from the Mortgage Bankers Association, found that apartment owners face more debt maturities than any other commercial real estate sector: nearly $300 billion coming due in 2026 alone, and $757 billion between now and 2028. Multifamily loans packaged into commercial mortgage-backed securities have seen their delinquency rate climb from 1% in October 2023 to 7.1% this year, the sharpest rise of any major property type, according to a Morgan Stanley report cited in the piece. Apartment values are down more than 20% from their 2022 peak, per Green Street.
The pattern the Journal describes is familiar to anyone who has watched Sun Belt real estate since the pandemic: money borrowed at 3% rates in 2020 and 2021 is now due for refinancing at roughly twice that cost, while new construction in Phoenix, Denver, Atlanta and Austin outpaced the renters available to fill it. “The chickens are coming home to roost for a lot of people,” Sean Burton, chief executive of the multifamily firm Cityview, told the Journal.
Scale Hasn’t Been a Shield
In June, Blackstone, the largest owner of commercial real estate in the world, was hit with a foreclosure on a $90 million loan tied to a Dallas-area apartment property it had bought at the end of 2021. “Lenders have gotten a lot more aggressive,” Ryan Cotton, Bain Capital’s head of real estate, told the Journal. “That could lead to some real turbulence as you see distress start to manifest.” Bob Hart, CEO of TruAmerica Multifamily Investments, said: “No one is spared here.”
The Journal’s reporting does note a countervailing signal: real estate data firm CoStar has raised its rent-growth forecast for the rest of the year, from 0.5% to 1.9%, and cash-flush buyers have started circling distressed apartment assets at steep discounts, in one case roughly 40% off a foreclosed apartment complex in the Dallas area.
Against that backdrop, Rastegar has started talking about his own firm’s foreclosures on the record.
“I thought that I was very well diversified,” Rastegar said. “What I didn’t understand is that if interest rates go up 5%, that diversity doesn’t matter. It taught me that I was not diversified beyond the asset class of real estate.”
What Happened at Rastegar Capital
Rastegar says 10 of Rastegar Capital’s apartment complexes were financed at conservative, Fannie Mae- and Freddie Mac-eligible terms, roughly 65% loan-to-value at around 4% interest. When borrowing costs on the firm’s floating-rate debt rose roughly 525 basis points, from about 4% to 9.25%, that increase eroded equity regardless of how the properties were performing operationally. A separate Rastegar-owned office building in Westlake, an older property acquired specifically for rezoning and redevelopment, was foreclosed on amid an office market that has stayed distressed nationally since 2020.
Rastegar has been direct about the properties his firm lost, tying the experience to the thesis of his 2022 book, The Gift of Failure, which opens with the line: “I hope you fail. I hope you fail a lot.” His argument, in the book and since, is that a setback is only useful once it has been named plainly and studied rather than explained away. He has applied that standard to his own portfolio: the losses were absorbed, and the firm kept operating.
Diversifying Beyond One Rate Bet
Rastegar’s response has been to widen the firm’s footprint beyond the structure that got squeezed. The firm, in the process of expanding into a five-strategy platform under a new INF1NITY brand spanning real estate, income, technology and venture, private equity, and infrastructure and essential assets, is deploying capital across asset types that do not all move with the same interest-rate cycle. Roughly two-thirds of the firm’s capital comes from institutional sources, including public pension funds, insurance companies and three separate firefighter pension associations, which subject the firm to their own due-diligence processes on top of its 10 years of audited financials, maintained through an outside fund administrator. The firm has invested across 38 cities and 13 states.
The firm’s development pipeline has kept moving even as the debt wall the Journal describes has squeezed the rest of the sector. In Kyle, Texas, the firm’s INF1NITY Square development, a 318-acre master-planned community, is underway with 1,000 single-family homes and 1,400 apartments planned alongside retail and an 11-acre site donated for a public elementary school. INF1NITY Park, a 600,000-square-foot industrial project, includes facilities supplying components for Tesla’s Austin gigafactory. And in Uptown Dallas, the firm is negotiating a letter of intent with a preeminent private investment firm on a project at 1899 McKinney expected to become the tallest building in the district.
The Oracle of Austin
Forbes named Rastegar the “Oracle of Austin” in 2021, crediting him with a read on the city’s population growth, business relocation and tax-driven migration patterns that predated the broader market’s recognition of the trend. Austin Monthly followed in 2022, profiling him as the “King of Austin Real Estate” during the city’s fastest-growing development cycle. The two pieces converged on the same premise: that Rastegar’s calls on the Austin market were grounded in data his firm had tracked internally before the wider market caught up. The same Sun Belt overbuilding the Journal traces through Austin’s apartment market today is the kind of data his firm has tracked for years.
Built From a $3,500 Loan
Rastegar started the company 11 years ago with a $3,500 loan, after an earlier career as a corporate litigator and entertainment executive. He still owns 100% of the firm he built from that loan.
Related Fund Management, the firm behind Hudson Yards in New York, wrote a $40 million check on a single industrial project Rastegar’s firm built, designed and leased outright.
He now describes the scale he is building toward in billionaire terms, a goal he ties to the same discipline behind the Oracle of Austin call.
Building Through It
For Rastegar, the past two years have been a whirlwind both personally and professionally. He is divorced and raising three kids as a single father while running the firm through the same rate cycle the Journal describes. He has made that combination part of his public commentary, too, appearing regularly on CNBC and Fox Business to discuss real estate and Texas migration trends alongside whatever his firm is navigating internally.
“I’m a single dad of three kids, in a city that had the quickest price jump in modern real estate history and then the sharpest decline,” Rastegar said. “The resilience of the firm: we’re thriving, we’re growing, we’re expanding. Dealing with the risk head-on, and explaining what it actually was, is the part of the story that hasn’t been told.”