- Executives at Bisnow’s National CRE Finance event said rising distress is now seen as inevitable for apartment owners that were counting on lower interest rates.
- About $1.8T of multifamily debt comes due over the next decade, with as much as $757B by 2028, while apartment prices fell nearly 5% between August 2025 and August 2026.
- Rialto has $14B of multifamily loans in workout, and about 8% of multifamily CMBS loans were delinquent in August, second only to office among major property types.
Executives at Bisnow’s National Commercial Real Estate Finance event last week said multifamily distress is increasingly inevitable as persistent oversupply collides with the latest jump in borrowing costs, according to Bisnow. Lenders are shifting to asset classes with better returns.
Apartments were the sector’s golden child just a few years ago.
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A Mountain of Maturing Debt
About $1.8T of multifamily debt will come due over the next decade. The Wall Street Journal reported that as much as $757B could mature through 2028.
Owners borrowed heavily between 2020 and 2022. At the time, rates were near zero and Sun Belt rents were surging. Those owners now face the toughest refinancing conditions.
Oxford Properties’ Andy Field said even well-performing properties can face foreclosure risk. That risk can emerge when pre-2023 debt reaches maturity.
Liquidity problems have already hit syndicators. These firms pooled equity to buy large portfolios with high leverage. Last month’s rate hike could push more of them under.
Prices and Costs Moving the Wrong Way
MSCI data show apartment prices fell nearly 5% from August 2025 to August 2026. Overall CRE prices remained flat during that period.
Meanwhile, the 10-year Treasury yield topped 5.3%. That marks its highest level since 2022. Mortgage Bankers Association data also show delinquencies rising across lender types.
Operating expenses rose nearly 37% from 2019 to 2026. Costs increased from $6,950 to $9,510 per unit, according to Harvard’s Joint Center for Housing Studies.
Rialto’s Joe Bachkosky said rents did not keep pace.
Special Servicers See It First
A third of loans recently transferred to Rialto’s servicing platform were multifamily. A decade ago, multifamily loans made up virtually none of its transfers.
Today, Rialto has $14B of multifamily loans in workouts. About 8% of multifamily CMBS loans were delinquent in August. Trepp reported that figure, up from 6.5% a year earlier.
That pace matches the CMBS delinquency climb CRE Daily has covered.
Only office has a higher delinquency rate among major property types.
Why It Matters
Northwind Group’s Ran Eliasaf expects a second wave of failures among highly leveraged syndicators. He compared the risk to Tides Equities, which defaulted on loans covering a 30,000-unit Sun Belt portfolio.
Meanwhile, Wafra’s David Hamm said office has been fully repriced. He also called retail his firm’s favorite sector.
Clarion’s Gary Rufrano sees industrial turning back into a success story.
Still, investors expect multifamily to recover. Hamm said the firm likes the sector long term but not how it is priced today.
Rufrano said investors need to see demonstrated performance before conviction returns. They also need to stop seeing trouble on the ground.
Hamm noted that rents have soared in New York and San Francisco. However, he said fundamentals elsewhere are pretty painful.
GoldenTree’s Sam Friedland questioned the risks lenders face. He asked whether lenders making apartment loans today are considering those risks at current leverage levels.
What’s Next
Panelists said investors want to see demonstrated performance before returning in force. Therefore, watch the next round of loan maturities and whether lenders loosen leverage standards.
GoldenTree’s Sam Friedland has already questioned those leverage standards. For a counterpoint on fundamentals, see CRE Daily’s report on how multifamily fundamentals are improving even as values lag.
