West Forest Capital, a New York City based direct real estate bridge lender, announced today that it continues to finance acquisitions, refinancings and other time sensitive transactions involving rent stabilized and mixed use multifamily properties throughout New York City.
The announcement follows the New York City Rent Guidelines Board's June 25 vote establishing a 0% increase for both one and two year rent stabilized renewal leases commencing between October 1, 2026, and September 30, 2027. The 7 to 1 decision marked the first freeze on two year renewal leases in the board's history and the first time the board froze both lease terms simultaneously. Approximately one million New York City apartments are rent stabilized. With the freeze in place, many owners and lenders are planning for the possibility that flat revenue guidance persists beyond a single cycle, which turns a one year policy decision into a multi year refinancing question.
The freeze comes as the board's 2026 Price Index of Operating Costs reported a 5.3% annual increase in the cost of operating buildings containing rent stabilized apartments, roughly double the 2.7% national inflation rate. Fuel costs increased 11.0%, insurance costs rose 10.5%, maintenance increased 6.0%, utilities rose 5.6% and real estate taxes rose 2.6%.
West Forest Capital said the new guidelines are causing many traditional lenders to reevaluate how they size loans on rent stabilized multifamily properties. The firm does not view rent stabilization, or the 2026 rent freeze, as an automatic reason to decline a loan. Instead, it evaluates each property's regulatory history, existing cash flow, expense structure, leverage and realistic exit strategy.
"Most lenders underwrite a rent roll. We underwrite the regulatory history behind the rent roll," said Minsok Oh, Founding Principal of West Forest Capital. "In a rent stabilized building, the legal regulated rent, the preferential rent and the amount actually collected can be three different numbers. Understanding those differences is critical to determining the property's real income, value and ability to support debt."
West Forest Capital's underwriting begins with the DHCR rent registration history for each regulated apartment. The firm reviews whether legal rents have been properly registered and supported, identifies preferential rents, examines vacancy and lease histories and compares registered rents with actual tenant collections.The firm also reviews potential rent overcharge exposure, rent reduction orders, unresolved violations and documentation supporting prior rent increases. West Forest Capital generally does not give value or loan proceeds for speculative rent increases that are not clearly permitted and documented under current New York rent laws.
The Housing Stability and Tenant Protection Act of 2019 repealed high rent vacancy deregulation, eliminated automatic vacancy and longevity increases and materially restricted many of the rent growth assumptions used in pre 2019 multifamily business plans. As a result, underwriting based on projected turnover or unsupported rent growth can significantly overstate a rent stabilized building's income and value. On the expense side, West Forest Capital reconstructs property level operating expenses using actual tax bills, current insurance premiums or quotes, fuel and utility bills, payroll, repairs, maintenance and management costs. The firm does not rely solely on seller pro formas or unusually low expense ratios that may not reflect the true cost of operating an older New York City multifamily building.
"The freeze does not mean every rent stabilized building is distressed," Oh said. "It does mean there is less room for underwriting mistakes. We lend against income the property is legally entitled to collect and has demonstrated it can actually collect. We then stress expenses, collections and the refinance or sale exit before determining the loan amount."
The Rent Guidelines Board's own research shows why building level analysis matters more than citywide averages. While aggregate net operating income for buildings with at least one stabilized unit rose 6.2% in the most recent Income and Expense Study, that growth fell to 2.4% in buildings that are 100% rent stabilized and 1.4% in fully stabilized pre 1974 buildings, precisely the stock most exposed to the freeze. Buildings that were entirely rent stabilized carried an average cost to income ratio of 66.3%, and the board's mortgage survey showed lenders increasing their vacancy and collection loss assumptions from 3.14% to 5.00%.
A simplified West Forest Capital stress test illustrates the potential effect on debt service coverage. Using the board's citywide 63.6% cost to income ratio, flat gross revenue and annual expense growth of 5.3%, a property's net operating income would decline by approximately 19% over two years. If debt service remained unchanged, a loan beginning at a 1.20x debt service coverage ratio would decline to approximately 0.97x before accounting for additional vacancies, collection losses or capital expenditures.
West Forest Capital emphasized that this stress test is not a prediction for every building. Lease timing, unit mix, preferential rents, collections, commercial income and individual property expenses can produce materially different results. The analysis demonstrates why lenders must evaluate each rent stabilized building individually rather than applying a conventional free market multifamily model.
Bridge Loans for NYC Rent Stabilized and Mixed Use Buildings
West Forest Capital generally provides one year, interest only bridge loans ranging from $500,000 to $5 million, including bridge loans for rent stabilized buildings facing near term maturities. Current financing requests involving rent stabilized properties primarily include:
Refinancing gaps where available bank proceeds are below a maturing loan balance; acquisitions requiring a faster closing than a traditional lender can provide; estate, divorce and partnership buyouts; transitional properties that need time to establish collections or resolve documentation issues; mixed use buildings with both regulated apartments and commercial income; and short term financing ahead of a property sale or conventional bank refinance.
Every loan is sized to both the current property value and a credible repayment strategy. West Forest Capital uses market based capitalization rates that reflect the building's location, condition, unit mix, regulatory profile, collections and expense burden rather than applying a single capitalization rate across the entire city.
Industry groups have announced legal challenges to the 2026 rent freeze. West Forest Capital said it will continue to underwrite the adopted 0% guidelines as its baseline assumption and will treat any judicial or legislative change as potential upside, not as a requirement for repayment.
About West Forest Capital
West Forest Capital is a direct real estate bridge lender financing non owner occupied properties throughout New York, New Jersey and Connecticut. Established in 2013, the firm provides short term financing for multifamily, mixed use, residential investment and other commercial real estate transactions.
West Forest Capital's principals have experience both financing and operating rent stabilized multifamily properties. The firm has evaluated and financed regulated buildings through multiple economic and regulatory cycles, including the 2019 Housing Stability and Tenant Protection Act and the 2026 New York City rent freeze.
Media Contact
Minsok Oh, Founding Principal
West Forest Capital
237 East 79th Street
New York, NY 10075
Phone: (212) 537-5833
Website: westforestcapital.com
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Published by: Randy Rohde