Middle Street Partners has wrapped up a $69M recapitalization and plans to use the funding for $1B of developments and acquisitions in the next few years, Multifamily Dive reported.

“It’s positioning us to play offense in this new cycle,” Middle Street co-founder Ryan Knapp told the publication.

Knapp said this move was not about recapitalizing because of distress in its portfolio but to increase its liquidity and make more capital available to go after new projects.

“I think we’re going to have a really good run here again,” Knapp told Multifamily Dive, adding that his firm is not married to any specific markets or sectors of the multifamily market.

The firm sold 80% of its stabilized portfolio in 2021 when a perfect storm of low interest rates and high sale prices pushed the multifamily market to a peak. Loans for many properties purchased at that peak are experiencing distress now.

“Real estate is famously cyclical, and you need these down cycles in order to get it right,” Knapp said. “We were disciplined during the peak, and now we’re excited.”

Middle Street has sponsored over $3B in investments in the Southeast and Southwest since 2009, according to a January 2025 release.

Multifamily construction starts are expected to be 74% below their 2021 peak and 30% below the prepandemic average by the middle of this year, according to a late 2024 report from CBRE. The imbalance between those figures and anticipated strong renter demand bodes well for strong rent growth and a lower vacancy rate, the authors wrote.

The recapitalization was completed with Inceptiv Management, a Culver City, California-based private equity firm, and a partnership of high net worth individuals operating under the name Cannery Woods.

Inceptiv Management earlier this year provided $30M in financing to Platte Canyon Capital, a Denver-based real estate investment firm. PCC is looking to acquire up to $1B in assets through joint venture partnerships over the next three years, the Los Angeles Business Journal reported.