- While delinquencies and the number of properties going into servicing are ticking up in the multifamily commercial mortgage-backed securities world, overall percentages are still historically low.
- Still, some properties are facing financial issues. Almost one in five of the loans on the special servicer watchlist, 19.69%, were from multifamily, according to Trepp, a data and analytics firm. That was the third-highest watchlist percentage of any commercial real estate sector behind lodging and retail.
- Trepp’s list of the five largest multifamily loans that are 90 days delinquent includes a student property in Alabama, a rent-restricted property in New York City, a fractured condo in Philadelphia and conventional apartments in Minneapolis and Midland, Texas.
Here is a snapshot of the five largest properties that were 90 days delinquent in August:
- The $37.4 million University Village loan, collateralized by a 1,164-unit student housing property in Tuscaloosa, Alabama, is the largest property that is 90 days delinquent. The property, which sits near The University of Alabama, had 40% occupancy as of March 2022, according to Trepp. It was opened for auction in June and was scheduled to close in August.
- The $32.8 million loan that supports the Park at Caldera, a 358-unit apartment complex in Midland, Texas, has been delinquent since November 2021. When the borrower declared imminent default in November 2021, the loan was transferred to servicing. The servicer continues to discuss relief options with the borrower, according to Trepp.
- A 137-unit mid- and high-rise apartment in Manhattan, is the collateral for a $32.1 million loan. Trepp says that more than half of the units in the 15-story building at 50 East 52nd Street are rent-stabilized and that street-level retail and a parking garage are part of the collateral.
- The collateral mid-rise Marine Club Apartments in Philadelphia is collateral for a $22.8 million loan. The fractured condo community includes 204 rentals and 97 units owned by individual condo owners. The loan was transferred to servicing in Oct. 2020. The borrower has been unresponsive to the lender's request for information and stopped remitting payments. A trial for foreclosure is scheduled for Feb. 2023.
- A 150-unit multifamily mid-rise in Minneapolis collateralizes the $17 million Mill City Quarter loan. The loan for the property, built in 2016, was returned from the servicer in August 2021 and the borrower was granted forbearance for the second half of that year. Though the borrower agreed to pay the amounts in forbearance, the loan is more than 90 days delinquent.
Despite the problems with these loans, Manus Clancy, senior managing director of applied data, research and pricing for Trepp told Multifamily Dive that apartment loans are still in fairly good shape.
“Unlike retail and hotels and others where you've had real pockets of concern, multifamily has been a tide that has been rising across the board,” Clancy told Multifamily Dive.
When properties fall into servicing, it is often due to a lack of attention, he said.
“Where you see it happening is primarily in places that are older and neglected,” Clancy said. “It is a property that people haven't put money into, and they started having physical problems. But even then, it’s pretty rare.”
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