Dive Brief:
- The servicing rate for multifamily commercial mortgage-backed loans hit thresholds not seen in years this August, while delinquencies continued to tick up, according to a pair of reports from data firm Trepp.
- The Trepp CMBS multifamily special servicing rate rose 60 basis points to 5.71%, reaching its highest point since December 2015.
- CMBS delinquencies also increased for apartments, rising 67 bps to 3.30%. Multifamily also contributed the largest net change in delinquent dollars of any sector, with a total of $407.8 million.
Dive Insight:
Servicing and delinquency rates have been rising throughout commercial real estate. The overall Trepp servicing rate increased 16 basis points to 8.46% in August. It rose each month in 2024 and reached a three-year record high in August. The mixed-use and office sectors each saw 66 bps increases.
The delinquency rate also increased for commercial real estate, rising one bps to 5.44%. Unlike previous months, the office sector was not the driver. Although there was $1.25 billion of newly delinquent office loans, $1.55 billion was no longer delinquent.
While multifamily’s distress numbers are rising, Mike Green, CEO of Larkspur, California-based multifamily investment firm Virtú Investments, thinks many loan issues, whether they’re CMBS or conventional properties, will be handled by lenders.
“It’s my suspicion — having been through this a couple of times, especially through the extend-and-pretend period — that muscle memory has been learned by these lenders,” Green told Multifamily Dive. “They’re working loans out, and they’re taking a little more money down.”
However, some lenders are taking back properties. San Antonio, Texas-based Lynd Cos. recently won an assignment to turn around an $800 million, 11,000-unit apartment portfolio that became distressed, according to a release shared with Multifamily Dive.
In addition, companies like Los Angeles-based apartment owner Tides Equities are facing the loss of properties.
“Obviously, you’ve seen a few guys that were syndicating having stuff taken back by lenders,” Green said. “That stuff has not cleared the equities market yet. It is going back to mezz lenders and other lenders.”
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