Dive Brief:
- The multifamily delinquency rate increased 56 basis points to 7.71% in April, as large loans in New York City and San Francisco went delinquent, according to Trepp. Six months ago, it sat at 7.12%, and two years ago, it was 6.57%.
- The Trepp CMBS Delinquency Rate for all commercial real estate decreased one basis point month over month to 7.54% in April. Industrial delinquencies increased 31 bps MOM to 0.96%, and lodging posted the largest decrease at 79 bps to 6.52%. Retail declined 31 bps MOM to 6.31%, and office nudged down two basis points to 11.69%.
- Additionally, this month, $35.6 million in multifamily CMBS debt is facing its hard maturity date, which Trepp defines as a loan with no remaining contractual extension options beyond the period in question, according to a separate report from the data provider. Across commercial real estate, $2.57 billion in loan balances, consisting of 74 whole loans across 100 total pieces, are reaching that status in May.
Dive Insight:
CMBS apartment loans aren’t problem debt in the apartment market, however, the much-discussed “wall” of multifamily loan maturities is slated to jump in 2026.
In fact, Tyler Chesser, co-founder and managing partner of CF Capital, thinks the wall of multifamily maturities hitting this year will be a bigger driver of transaction volume than any Federal Reserve interest rate decision.
“With $160+ billion of multifamily loan maturities coming due in 2026, up over 50% from last year, lenders are losing patience, sponsors are running out of runway, and capital that's been sitting on the sidelines needs to get deployed,” he said.
A number of investors expect those problem properties to hit the market, whether offered by owners or banks, and ignite the sales market.
While some lenders are working with borrowers, AMC Executive Vice President of Client Services Jon Tullo said other owners will have decisions to make about their properties.
“Thus, we expect to see some choppiness in the market this year as some owners decide selling is a better financial prospect than refinancing with interest rates significantly higher than what they were at the time of the original loan,” Tullo said in emailed comments.
Even though equity can be hard to come by for some projects and owners, capital is flowing, Tullo said. But until problem loans are resolved, the sales market won’t flourish.
“The multifamily market in the near term will stay at the bottom of the cycle as there is still quite a bit of capital stack stress to unwind,” Ivan Barratt, the founder and CEO of BAM Capital, told Multifamily Dive in emailed comments.
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