In February, CRED iQ reported an overall decline of four basis points in the distress rate, with multifamily experiencing a significant 80-bp increase. This marks the largest monthly rise in this sector within the past 18 months.
As an example of concerning developments being monitored by CRED iQ within the apartment industry, a $94.1-million loan for The Reserve at Brandon was cited. Located in Brandon, FL and consisting of 982 units, this multifamily property became delinquent for 30 days during February.
According to CRED iQ’s analysis: “The loan’s rate cap expiration date was set for April 2024 along with its initial maturity date. At securitization there were three options to extend it by twelve months each time.” Due to low occupancy and DSCR (reported as low as .41), it was added to their watchlist back in May of last year when occupancy levels sat at just over eighty-two percent.
At underwriting stages prior to securing financing on behalf of The Reserve at Brandon community itself had been appraised around $232 million ($263K per unit). It is expected that once stabilized value will reach closer towards $313 million; stabilization is anticipated sometime during March or April next year (2025).
Citing discussions surrounding extending maturity dates beyond what they are currently scheduled through servicer commentary from various sources including those who work closely alongside these types properties such as self-storage portfolios which have become current after previously being delinquent last month – primarily contributing factor behind why we saw decrease overall rates distressed loans across all sectors except office space where distress rates remain high hovering near eleven percent according latest data available from Connect CRE analysts tracking trends nationwide real estate markets throughout United States today.
Photo courtesy: Courtesy photo provided by commercial real estate firm known simply as “Connect”
