Despite the silly NFT picture, Keith Wasserman is a multi-billion dollar real estate private equity player in the Western US, focused predominantly on multi-family / apartments. His target markets are the hot mountain west locations such as Denver, SLC, Reno, Portland, Phoenix, etc.
Yesterday he sounded the alarm on negative leverage, the point at which the interest rate on debt exceeds the cap rate or unlevered yield on the property. Said differently, for example, a property yields 4% net of expenses before debt service, but the interest rate on the debt is 4.5%.
Negative leverage can work, when growth is high. The hope is that the property yield rises as rents rise and eventually the yield far outstrips the interest rate on the debt.
That said, negative leverage is often a point in a cycle when something gives, to the downside. As mentioned before, I believe now is a time to exercise caution in commercial real estate, though often this takes time to play out.