Apartment owners are heading into a heavy period of debt maturities as higher interest rates collide with loans made during the low-rate phase of the pandemic recovery. Citing Mortgage Bankers Association data, the Wall Street Journal reports that multifamily investors face approximately $757 billion of apartment loans coming due between 2026 and 2028. Nearly $300 billion of that total is scheduled to mature in 2026 alone, and borrowers are confronting refinancing costs that are roughly double the borrowing rates available in 2021, when many of these loans were originated.
According to the Wall Street Journal, five years ago apartments were widely viewed as a relative safe haven in commercial real estate as other property types struggled to rebound from the pandemic. Borrowing costs at that time hovered near 3%, and many markets saw double-digit rent growth, reinforcing the sector’s appeal. Mike Wolfson, managing director for multifamily capital markets research at Newmark, told the Wall Street Journal that there was a sense of relative euphoria in that period, but that conditions shifted quickly as rates rose.
The current environment is revealing more stress in multifamily debt performance, particularly in securitized loans. The Wall Street Journal, citing a Morgan Stanley report, notes that the delinquency rate for multifamily loans in commercial mortgage-backed securities climbed from 1% in October 2023 to 7.1% this year. That rise is described as the largest increase among the major commercial property types tracked in the report, indicating that pressure on apartment borrowers has intensified over a relatively short timeframe.
Data from Trepp, as reported by the Wall Street Journal, provide additional context on the near-term refinancing challenge. About 3% of the loans maturing this year that cannot be extended are already in some form of distress. Trepp characterizes that share as the highest level seen in the past five years, suggesting that more borrowers are struggling to navigate loan expirations under today’s higher-rate conditions.
While the article highlights a broad sector-wide issue rather than individual assets or markets, the combination of a large maturity calendar, significantly higher borrowing costs than in 2021, and rising delinquency rates in multifamily CMBS points to a more difficult refinancing landscape for apartment owners. The experience of the last several years, moving from low-rate optimism and robust rent growth to a higher-rate, more stressed credit environment, underscores how quickly financing conditions have changed for the multifamily sector.
