Dive Brief:
- Although commercial mortgage-backed securities’ delinquency and special servicing rates rose across commercial real estate in October, they fell for multifamily, according to Trepp.
- The special servicing rate for apartments fell 22 basis points to 1.65% in October, according to Trepp data. The delinquency rate dropped eight BPS to 0.85%.
- By comparison, the overall special servicing rate rose three BPS to 4.97%, while the delinquency rate increased four BPS to 2.96%. The office and retail sectors helped drive the rising special servicing rates with increases of 28 and 25 BPS, respectively.
Dive Insight:
In its October report, Trepp indicated that it remained to be seen whether the increase in overall delinquencies was due to higher interest rates and a slowing U.S. economy or just a “momentary bump.”
“CMBS investors have been watching carefully for signs of distress. It is expected that the higher refinancing costs could make it difficult for some marginally performing assets to be refinanced,” according to Trepp.
Although the apartment sector is in much better shape than retail and office, multifamily investors expect to see an increase in distressed properties hitting the market later next year or the year after.
Joe Stampone, managing partner of investments with New York City-based owner Atlas Real Estate Partners, said the company’s focus is preparing to take advantage of “modest” distressed opportunities.
“It’s really about establishing strong capital partners and having discretionary capital at our disposal to go after opportunities aggressively when and if they do arise,” Stampone said.
Still, Stampone doesn’t anticipate the same level of troubled loans as during the global financial crisis of 2008.
“We don't expect to see massive distress, but we think there will be an opportunity to pick up high-quality properties at an attractive basis,” Stampone said.
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