What would happen to fixed-rate MF but market cap went 200bps ?

[Carlos Ptriawan]

Hi I have question that I can't decipher, lets say there're similar asset class type of MF in one zip code. All of them purchase at cap 3.5 ; all making same rent same gross income. The difference is , the 4 of them uses floating debt without caps, while one is using fixed debt of 4.5% (for example). Imagine all of them is having the loan to the same bank.

Now assume the 5 year baloon is due, and Market cap in the greater region is at cap 6.0x , since 4 uses floating, they are all going into foreclosure as DSCR is 0.8x; they're all having the same Income before debt. But since one of the fixed-rate MF has fixed rate, lets say they are able to sustain the DSCR into 1.05x in the last year for example so the LP/GP is at least able to return the equity.

My question is, it is easy to understand the floating-rate GP MF would be under foreclosure with valuation of cap 6.0 ; but what happen to fixed-rate-GP ? are they able to sell it with market cap between 4 to 5 while other MF comp is at 6 ? Also who really wants to buy that fixed-rate asset giving all comps is at cap 6 ? what happen if there's no buyer ? what do I miss here ?