Dive Brief:

• The loan for Storehouse Lofts, a 161-unit property in Philadelphia, has been moved to special servicing after a payment default, according to a Morningstar Credit report shared with Multifamily Dive.
• The loan for the property, with $28 million outstanding, initially fell delinquent in January 2025 and has moved to the 90-day category as of August. The loan had previously been in servicing during the pandemic, before the borrower brought in preferred equity, according to Morningstar.
• The property was previously known as The Fairmount at Brewerytown. Philadelphia-based Spain Development Group, which redeveloped the asset, sold it in 2021. It is currently listed on the website of MM Partners, also headquartered in Philadelphia, which didn't reply to a request for comment from Multifamily Dive.

Dive Insight:

The debt service coverage ratio at Storehouse Lofts was at 1.40x in 2024, with the property at 87% occupancy, according to the Morningstar report.

“Performance was fine as of year-end 2024, so it’s a bit difficult to ascertain why it’s fallen delinquent,” said David Putro, head of commercial real estate analytics at Morningstar Credit.

However, Morningstar noted that there had been “constant turnover” at the building’s 7,500-square-foot tavern. The space has gone through multiple name changes, with the most recent iteration closing in March 2025 after the operator shut down.

It’s “hard to tell what’s going on,” Putro said. “The retail space has been hit or miss, but the combined rent was pretty small compared to the apartments.”

Average apartment rents in Philadelphia have risen $15 year over year, according to Zillow. However, after peaking at $1,650 in July, they have fallen to $1,615.

New deliveries have been an issue in parts of the city, as noted by UDR Chief Operating Officer Mike Lacy on the Highlands Ranch, Colorado-based REIT’s second-quarter earnings call in July.

In “Center City, obviously, in Philadelphia, we're dealing with quite a bit of supply,” Lacy said.

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