A Quarter of Texas Floating-Rate Apartment Loans Can't Cover Their Debt

Texas floating-rate apartment loans are buckling under higher rates, with a quarter unable to cover debt even while current.

October 26, 2026

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Good morning. A quarter of Texas's performing floating-rate apartment loans no longer earn enough to cover their debt. The loans are current, but 2021 and 2022 vintages carry a delinquency rate more than eight times the rest.

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Market Snapshot

Top Market

By Transaction Volume

Dallas — $129.3M

Properties Sold

All Asset Types

Transaction Volume

Sales Activity

$251.4M

Top Office Submarket

Avg Starting Rent

Far Northwest (Austin)

$83.36 / SF

Texas Office Rent

Avg Effective

$36.36 / SF

Office Rent Growth

YoY Change

-17.1%

*Office metrics courtesy of CompStak; data from 7/1/26 – 9/30/26. Sales metrics courtesy of Actovia; Texas properties reported sold during the week of 9/26/26 – 10/2/26.

Coverage Gap

The Cracks Show in Texas Apartment Debt

Higher rates are exposing a soft spot in Texas multifamily, where a quarter of floating-rate apartment loans no longer earn enough to cover their debt.

By the numbers: According to Trepp, $3.04B across 130 performing floating-rate Agency apartment loans in Texas reports a DSCR below 1.0x. That is 25.3% of the performing balance, at a 0.77x weighted average, so cash flow falls short of debt service even while the loans stay current.

A vintage problem: The stress clusters in recent deals. Loans packaged in 2021 and 2022 hold 87.5% of the delinquent floater dollars, with an 11.33% delinquency rate about 8.4 times the 1.35% rate for other years.

Variable paper bites: Floating-rate loans are just 21.3% of Texas's Agency apartment balance but 55.8% of the $1.35B that is delinquent. Those loans carry a 5.74% average coupon against 4.66% on fixed-rate debt, and the delinquent ones pay 5.99%.

A big book at risk: Texas holds $150.10B of securitized apartment debt, second only to California, so even a contained troubled share is a large dollar figure. Of 28 delinquent floaters, the 15 that report coverage all land under 1.0x, at a 0.72x weighted average.

➥ THE TAKEAWAY

Current today, exposed tomorrow: These loans are paying on time, but thin coverage leaves little cushion if rates stay high or occupancy slips. As 2021 and 2022 floaters reach maturity, more Texas owners could face refinancing gaps that force sales or restructurings.

Around Texas

➥ A developer pitched a 535-acre hospitality district near Lockhart, anchored by a 500-room hotel, conference space and a 5,000-seat amphitheater, targeting a 2029 first phase.

➥ Craig International sold the nearly 37K SF District 121 restaurant and retail center in McKinney to a local buyer, trimming its North Texas retail holdings.

➥ Partners Development broke ground on a new Texas campus, adding to the steady pipeline of build-to-suit and campus projects across the state.

➥ High Street Residential broke ground on a 435-unit office conversion along I-635 in Dallas, replacing three vacant office buildings with mixed-income housing.

➥ United Airlines is advancing a $2.6B Terminal B overhaul at Houston’s Bush Intercontinental, adding 40 gates to lift peak capacity about 40%.

➥ Frisco approved up to $5M in tax rebates for a hotel and retail district beside FC Dallas’s Toyota Stadium, with construction set to begin in 2027.

Follow the Money

OFFICEPLANO KDC is seeking about $3.5B in credit-tenant-lease debt to finance AT&T’s new Plano headquarters, one of the largest such deals ever attempted.

INDUSTRIALFORT WORTH Carrier will invest more than $600M to convert a 1.2M SF AllianceTexas building into an advanced manufacturing hub, adding 1,500 jobs.

HOSPITALITYMCKINNEY Venu closed a $60M sale-leaseback with Store Capital on its 20,000-seat Sunset Amphitheater, funding the rest of the $330M project.

MULTIFAMILYRICHARDSON Price Realty refinanced its 403-unit Standard at CityLine with a $57M, five-year New York Life loan, the latest bet on the State Farm hub.

CAPITALAUSTIN Endeavor raised a $210M private-equity fund, its first GP vehicle, to pursue 30 to 40 value-add deals across Austin, Dallas and beyond.

INDUSTRIALMIDLOTHIAN Affinius Capital lent Hillwood $94M to refinance three 2023-built warehouses totaling 1.2M SF at Crossroads Logistics Park near Dallas.

📈 CHART OF THE WEEK

The September Texas Business Outlook Surveys indicated continued strong expansion in manufacturing output but flat service sector activity. The Texas Manufacturing Outlook Survey headline index rose to 29.5—well above the series average of 9.7—indicating robust growth.