New York and Texas have recently been hotbeds of distress in multifamily commercial mortgage-backed securities, but CMBS loans are coming under pressure across multiple markets.
Last week, Morningstar highlighted three additional properties in other states that are heading back into servicing due to various issues, including sponsor bankruptcies and code violations.
For instance, Estates at Palm Bay’s $61 million loan moved to special servicing following a bankruptcy filing by the loan sponsor, Lurin Capital, in early March, according to a March 23 Morningstar report. Lurin has faced default issues across multiple states, including Florida and Arkansas, leading to eventual bankruptcy filings, according to The Real Deal. The firm did not reply to Multifamily Dive’s request for comment.
Despite reporting a 1.23x debt service coverage ratio through the first nine months of 2025, Lurin had been late on payments for the property since May 2025. Morningstar noted that a fire at the property took four units offline, and the status of those repairs is unclear.
“The loan has struggled with delinquency for most of its tenure (originated in August 2024) and transferred to special servicing in March 2026 following the sponsor’s bankruptcy filing,” Sarah Helwig, vice president of Morningstar Credit Analytics, told Multifamily Dive in an email.
In Chicago’s Hyde Park neighborhood, the $31 million loan for Drexel Terraces was transferred to special servicing due to a payment default, according to a March 25 Morningstar report. It said Raphael Lowenstein and John Lowenstein were listed as sponsors for the property. Multifamily Dive could not contact them for comment.
The 116-unit multifamily property backing the loan produced net cash flow well below breakeven in 2024 despite 99% occupancy. Raphael Lowenstein’s 312 Property Management has faced issues with code violations and tenant activists, according to The Real Deal.
“The loan was originated not too long ago, in February 2024, but has struggled with delinquency throughout its short tenure, likely due to the code violations,” Helwig said.
In Los Angeles, the $31.8 million loan backing 449 South Broadway was transferred to special servicing after payment, according to a March 25 Morningstar report. Michael Fallas and The Michael Fallas Living Trust are listed as sponsors. The Real Deal reported that the property is on the market.
The 88-unit property’s loan originally fell delinquent in January 2025 after several years of decreasing cash flow, with 2024's net cash flow falling below breakeven before 2025's rebound to 1.00x. The property is currently being marketed for sale, according to LoopNet.
“The mixed-use property (primarily multifamily with some retail space) transferred to special servicing in February 2026 for delinquency,” Helwig said. “The retail tenant, Pegasus Trucking (42,363 square feet; 29% of underwritten base rent), departed in 2023.”
As a number of CMBS loans have entered servicing recently, the multifamily rate increased by 16 bps month over month to 8.3% in February, according to data firm Trepp. Six months ago, it was 8.61%, and 12 months ago it was 8.51%.
Apartment observers are also noticing a slight increase in distress, from class A new developments down to decades-old class C properties.
“This wall of tonight and distress continues to kind of be background noise, but I am seeing it a little bit more,” Ian Bingham, senior vice president of business development at Chicago-based owner and operator Daniel Management Group, told Multifamily Dive.
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