Hello Friends and Investors,

Two weeks ago the Federal Reserve held its benchmark rate steady for a fifth consecutive meeting — 3.50% to 3.75% — in a 9-3 vote that saw three regional presidents dissent in favor of a hike. Higher-for-longer isn't a warning anymore; it's the environment we've been underwriting to for months.

Markets like this reward patience. Occasionally, they also hand diligent and disciplined investors an opportunity that would not otherwise exist. This month we're sharing both: our read on the current landscape, and a new investment opportunity in our own backyard that captures exactly why that discipline pays off.

Capital remains abundant. What's changed is its temperament. Lenders and equity alike are exercising real selectivity — underwriting conservatively, pricing risk deliberately, and reserving conviction for deals with a genuine story rather than assets priced for perfection.

Introducing Main & Clay

That selectivity is the entire story behind our newest opportunity: Main & Clay, a 269-unit Class A community in Louisville's hyper growth NuLu neighborhood. Built in 2018 and taken under contract in 2022 at a basis roughly 22% above where we're acquiring it directly from the developer today, the deal fell out of that contract during the rate-hiking cycle — and is now available to us approximately 30% below current replacement cost (a delta of ~$100K/unit).

It's a microcosm of this market: strong real estate, real demand, and a pricing dislocation created entirely by capital markets circumstance, not by any flaw in the underlying asset. Sound good? Read on for more on the story behind this deal below.

The Foundation

It has been nearly two years since our last acquisition. If you've been following along, you know that gap was not due to inactivity — it was patience and selectivity. In a market defined by mispriced risk and capital that has, until recently, been slow to reprice it, we have been diligent in sifting through the chaff to uncover a deal that justified breaking that streak.

Main & Clay is that deal.

The story begins in 2018, when a merchant developer delivered Main & Clay, a 269-unit Class A community with 2,400 square feet of ground-floor retail in the heart of NuLu, the fastest growing submarket in Louisville. The property stabilized right into the onset of COVID-19 in early 2020, which delayed a planned sale. By the time the asset finally went under contract in Q2 2022, pricing had run well ahead of where it stands today — a level roughly 22% higher than our current basis. Then, when the rate-hike cycle took hold mid-transaction, the deal went quiet.

We're acquiring it now, completely off-market, at a basis approximately 30% below current replacement cost, in the highest-upside submarket in Louisville, with in-place cash flow and strong projected returns for a Class A asset. None of this would have been possible without the exact sequence of dislocation the broader market has experienced over the last several years — which is precisely why we see Main & Clay as more than a single transaction. It's a case study in what disciplined, patient capital can access in this environment.

This is what you've been waiting for. Now is your opportunity to take advantage. Stay tuned as we share more information on how you can participate in this one of a kind opportunity - more information is coming soon.

As the Main & Clay deal illustrates, we're doubling down on our home market this quarter, and the data supports it. Louisville's multifamily fundamentals are quietly among the healthiest in the country heading into the back half of 2026:

• Supply is contracting sharply. New completions in several submarkets are on pace to fall to less than 10% of last year's volume, and construction starts have pulled back across the metro.
• Demand is accelerating. The market absorbed roughly 3,667 units over the past 12 months, up from 2,590 the year prior — a sign renter demand is not just keeping pace with new supply, but outrunning it.
• Occupancy has been remarkably resilient, holding above 93% among stabilized properties every year since 2022, with rent growth modestly outpacing the national average.
• NuLu — Main & Clay's submarket — continues to be named among the city's standout neighborhoods for investment, drawing strong demand from young professionals and steady appreciation.

Simply put: Tightening supply, resilient absorption, and disciplined underwriting are exactly the conditions that make a well below-replacement-cost basis in a top submarket meaningful rather than just opportunistic.

In July, we expanded our best in class asset management vendor relationship across the full portfolio. Early results have been strong, and we're looking forward to compounding that momentum in the quarters and years ahead.

Economist Jay Parsons on Apartment Affordability

Apartment affordability is IMPROVING as rent-to-income ratios continue falling to the lowest levels since prior to the pandemic, now at 21.7%. This is a very good sign of the financial health of renters in market-rate apartments.

Read the Article

Podcast: 2026 Multifamily Midyear Investment Outlook

Leaders from NMHC, Berkadia, CBRE, PGIM, and Yardi Matrix weigh in on where capital is flowing, the rate outlook, and how underwriting is shifting for the second half of the year.

Watch the Episode

Principles for Dealing with the Changing World Order
by Ray Dalio

A data-driven study of 500 years of debt cycles and currency regimes. Essential context for why productive real assets matter in a period of persistent fiscal and monetary uncertainty.

Get the Book

"The essence of investment management is the management of risks, not the management of returns."

— Benjamin Graham

Please stay tuned for more information on how you can participate in our latest opportunity and as always, thank you for your continued trust and partnership.

Schedule a call with Tyler: Lets Talk!

Best,

The CF Capital Team