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AnalysisReal EstateThe WrapThe Ground Floor

Multifamily refinancing gap totals $6.8 billion

New apartment loans are priced about 165 basis points higher than securitized debt due by 2029, CRED iQ calculates.

At a glance

  1. New apartment loans are priced about 165 basis points higher, lifting interest costs roughly 41% and leaving a $6.8 billion refinancing equity gap for borrowers, CRED iQ calculates.
  2. For private real estate lenders and equity providers, the consequence is the $6.8 billion gap that fresh capital must fill.
  3. Brookfield walked away from the 785-unit Beaudry tower in Los Angeles less than four years after opening.

Almost 81% of securitized multifamily debt due by 2029 pays less than 5%, CRED iQ data show.

New apartment loans are priced about 165 basis points higher, lifting interest costs roughly 41% and leaving a $6.8 billion refinancing equity gap for borrowers, CRED iQ calculates. Apartment rents grew 1% over the past year while vacancy rose to 4.7% and net absorption fell to 8,747 units, CBRE said in third-quarter data. A single $69.6 billion merger accounted for most of the quarter's $112.3 billion in apartment trades, according to CBRE.

For private real estate lenders and equity providers, the consequence is the $6.8 billion gap that fresh capital must fill. At Commercial Observer's finance forum, Nomura's Larry Kravetz said multifamily lenders' patience with extensions has run out, so borrowers facing the reset are likely to need fresh equity or hand back assets.

Brookfield walked away from the 785-unit Beaudry tower in Los Angeles less than four years after opening. The property is 95% occupied after being filled with free rent.

A 165 bp reset leaves a $6.8B equity gap

Securitized multifamily debt due by 2029 versus pricing on new apartment loans

Refinancing equity gap$6.8B
Debt due by 2029 under 5%81%
Maturing vs. new loan rate165 bps
Higher interest cost41%
Source: CRED iQ; CBRE third-quarter data

Reported by The Wrap desk from CBRE, CRED iQ, Trepp and Commercial Observer. Published . Corrections

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Multifamily refinancing gap totals $6.8 billion