Multifamily Distress Builds as Lenders Pivot to Other Assets

Multifamily distress is building as oversupply meets higher borrowing costs, and lenders are shifting toward property types with better returns, according to Bisnow’s coverage of its finance conference.

Executives who spoke at the New York event last week said more trouble looks unavoidable for apartment owners who had been waiting for lower rates.

A Mountain of Maturing Debt

About $1.8T of multifamily debt will mature over the next decade, and as much as $757B comes due by 2028, the Wall Street Journal reported. Many of those loans date to 2020 through 2022, when rates sat near zero and Sun Belt rents jumped by double digits.

Since then the picture reversed. MSCI shows apartment prices off almost 5% between August 2025 and August 2026, while overall CRE prices were flat. The 10-year Treasury, which most CRE borrowing is priced against, has moved past 5.3%, its highest since 2022, and the Fed’s rate hike signaled no relief soon.

Andy Field of Oxford Properties said at the event that even well-performing buildings can be at risk if their debt was issued before 2023, because a maturity can trigger a crisis.

Costs Outrun Rents

Operating costs climbed nearly 37% from 2019 to 2026, reaching $9,510 per unit from $6,950, per Harvard’s Joint Center for Housing Studies. Rialto’s Joe Bachkosky said rents did not keep pace, and owners must now spend capital simply to hold current rents.

Wafra’s David Hamm said fundamentals are painful away from the rent spikes in New York and San Francisco. Oversupply has eaten into demand in Sun Belt markets in particular.

Special Servicers See It First

Rialto, one of the most active CMBS special servicers, says about a third of loans recently transferred to it are multifamily, up from almost none a decade ago. It now has $14B of apartment loans that need workouts.

Trepp puts August’s multifamily CMBS delinquency rate near 8%, versus 6.5% twelve months before. Only office runs higher among the major property types.

Lenders and Syndicators Under Strain

On another panel, GoldenTree’s Sam Friedland questioned whether lenders making apartment loans today are weighing the risks at the leverage levels they offer.

Northwind Group’s Ran Eliasaf said last month’s rate hike could trigger a second wave of failures among syndicators, like the default by Tides Equities on loans tied to a Sun Belt portfolio of 30,000 apartments after rates rose in 2023.

Capital Rotates Elsewhere

Investors are finding better short-term returns elsewhere. Hamm said office has been fully repriced and that retail has been his firm’s favorite property type for years. Clarion’s Gary Rufrano said industrial is recovering after a stretch of overbuilding, as consumers keep spending despite tariff worries.

Meridian’s Benjamin Nevid said investors still expect multifamily to return to favor because people always need housing. Hamm put it simply: his firm likes the sector long term but not its current pricing.

Why It Matters

Bachkosky said he does not see apartments sinking to office-like levels, but the stress hits an asset class long seen as a steady performer. He also warned that capital is still eager to buy apartments without recognizing the issues, since the sector is the largest and the housing shortage continues.

The strain is visible in loan data, as CMBS delinquency hit its highest rate since 2020. Even so, some data show multifamily fundamentals improve while values lag.

What’s Next

Watch maturities through 2028, special servicing transfers and whether more syndicators falter. The next test is how lenders handle properties with pre-2023 debt that perform well but cannot refinance.