- A total of $3.04B across 130 performing floating-rate Agency apartment loans in Texas reports an NCF DSCR below 1.0x, a balance-weighted 0.77x, even though they are still paying.
- Loans securitized in 2021 and 2022 hold 87.5% of the delinquent floating-rate balance, with an 11.33% delinquency rate against 1.35% for every other vintage.
- Texas has the most floating-rate Agency apartment balance among the five biggest securitized states, and its delinquent loans are far larger, averaging $26.8M each.
Roughly one in four performing floating-rate Agency apartment loans in Texas reports a DSCR below 1.0x, according to Trepp Research.
That is $3.04B across 130 loans, which is 25.3% of what’s performing, at a 0.77x weighted average. The loans are current, but reported cash flow doesn’t cover their debt service.
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The Big Picture
Texas holds $150.10B of securitized apartment debt, second only to California. Floating-rate loans are 21.3% of its Agency apartment balance yet 55.8% of the $1.35B that’s delinquent.
Only 15 of the 28 delinquent floaters report coverage, and all 15 land under 1.0x at a weighted 0.72x. The other 13, nearly half (47.5%) of delinquent dollars, report none.
The 2021-22 Vintage Problem
Deals packaged in 2021 and 2022 carry 87.5% of the delinquent floater dollars. Their delinquency rate is 11.33%, about 8.4 times the 1.35% for other years.
Floaters carry a 5.74% average coupon compared with 4.66% on fixed-rate paper, and the delinquent ones pay 5.99%.
CRED iQ found the same vintage effect, as CRE Daily reported in its piece on the multifamily refinance gap: 2021 and 2022 loans had the worst shortfall, with 57% of balance unable to refinance without new equity.
How Texas Compares
Texas floating-rate Agency loans show a 5.89% delinquency rate, versus 1.26% across the state’s other Agency loans and 3.08% across all its securitized apartment loans.
Across the five largest securitized states, Texas accounts for 31.1% of the five-state Agency floater total and 41.2% of its delinquencies. New York’s rate is higher at 12.52% on a smaller balance, and the other three come in lower: 2.20% for California, 1.28% for Florida and 0.40% for Georgia.
Large Loans Drive the Dollars
The typical delinquent Texas floater is $26.8M, about 2.8 times Florida’s, the next largest. New York’s, by contrast, average just $3.7M.
The two biggest delinquent loans in the state are floaters. The Kace, a Grand Prairie community of 720 units, carries $92.2M and slid into special servicing during April ahead of an expected payment default. Its 2025 cash flow works out to a 4.4% debt yield, under its 5.61% coupon.
Weston Medical Center Apartments, a 1972-built Houston asset with 793 units, owes $83.8M and entered special servicing the same month. Occupancy was 83% in July, coverage is 0.57x, and the annualized debt yield of 4.4% trails a 6.40% coupon.
Why It Matters
Delinquency shows where loans already broke. Coverage shows where they could, and $3.04B of current Texas loans sit below 1.0x. Trepp calls them a group worth watching for early signs of credit trouble.
Distress is spreading beyond bank-style lenders. Trepp’s earlier count, in CRE Daily’s report that private-label CMBS holds half of delinquent securitized apartment debt, showed a 7.69% rate in that segment against 0.80% at Freddie Mac.
What’s Next
Watch the 2021-22 floaters as they hit maturity and rate caps. Loans below 1.0x that still pay are the likeliest next entries on the special servicing list.
