- LP and GP risk appetite is gradually returning, with early-stage deal discussions and capital allocation activity on the rise.
- Equity fundraising remains challenging, but capital is re-engaging, especially in private credit and structured equity strategies.
- Scarcity of discretionary equity is reshaping deal dynamics, giving investors who bring capital to the table a strategic edge.
- Investment sales activity—especially in multifamily—is rebounding, signaling renewed price discovery and investor confidence.
Early Signs of Re-Engagement
Walker & Dunlop Investment Partners (WDIP) is seeing increased momentum from both limited partners (LPs) and general partners (GPs) after a long stretch of market caution. While deal volume and underwriting activity haven’t returned to pre-pandemic highs, a growing number of institutions are beginning to move off the sidelines—recognizing that inaction also carries risk.
Investors are no longer just seeking stability; they’re beginning to underwrite for future upside, even if cautiously.
Fundraising Challenges Persist, But the Freeze Is Easing
Equity capital remains hard to come by, and institutional allocators continue to manage legacy portfolios and internal pacing concerns. Still, the capital markets are showing signs of life. LPs are engaging in meetings, showing increased interest in private credit and preferred equity offerings that blend yield with structural protection.
The key shift: capital hasn’t vanished—it’s simply become more selective. Sponsors with a proven track record in managing through volatility are seeing more traction.
Equity Scarcity Is Rewriting the Rules
Perhaps the defining feature of the current cycle is not just caution, but scarcity. There’s little discretionary equity chasing ground-up development or high-risk transitional assets. That scarcity is flipping the power dynamic in favor of capital providers, allowing them to dictate terms and unlock opportunities that might have been previously inaccessible.
Creative capital structures—blending defense and offense—are gaining traction as sponsors look to fill funding gaps.
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A Rebound in Transactions Signals Market Stabilization
Modest increases in investment sales activity, especially in multifamily, are a key indicator that market sentiment is improving. More sellers are adjusting to current valuations, and buyers are underwriting with renewed confidence. WDIP notes that many of these deals are not just simple trades—they’re complex restructurings, recapitalizations, and sponsor transitions, showing that capital is returning to more nuanced parts of the market.
Looking Ahead: Key Signals to Watch into 2026
WDIP expects the next phase of the cycle to be shaped by:
- Macroeconomic clarity on inflation and interest rates
- Return of programmatic capital and repeat LP-GP partnerships
- Rising demand for structured equity and credit solutions
- Expansion of capital stack strategies, including hybrid and rescue capital.
WDIP’s Focus: Navigating Complexity with Clarity
WDIP is leaning into complexity, where inefficiencies often create opportunity. By structuring around legacy capital, identifying mispriced risk, and finding a path to stability for distressed assets, WDIP is helping capital partners deploy with purpose.
While a full market rebound is still a ways off, the early signs point to a new phase—one where thoughtful risk-taking and operational expertise can generate meaningful returns.
As the market transitions, WDIP sees this as the time to act deliberately, not wait. The thaw has begun—and for strategic investors, the next chapter is already in motion.
