Two 2025 multifamily loans transferred to servicing after payment shortfalls

Two 2025-vintage multifamily loans have been transferred to servicing after payment shortfalls, Multifamily Dive reported. They cover the 330-unit Cypress Village Apartments and the 384-unit The Abington, properties in Missouri and Tennessee.

According to Morningstar commentary cited by Multifamily Dive, both loans carried cash management issues, deposit account control agreement compliance failures, unresolved insurance deficiencies and uncured lien and title matters. Servicer notes also flagged payment-in-lieu-of-taxes issues and citations for damaged roofs, siding, fascia, windows and parking lots. A deposit account control agreement lets a lender take control of a property's cash, so a compliance failure suggests the lockbox and reserve mechanics were not operating as written.

Occupancy at the properties fell from 90% at closing to 65% by the end of 2025, according to Morningstar's Putro, and the servicer tied the condition citations to residents leaving. Knightvest founder and CEO David Moore told Multifamily Dive that buyers avoid deals like these because the deferred maintenance is so severe: the properties are "almost like they need to be reset, probably in half."

Danny Fishman, CEO and co-founder of GAIA Real Estate, told Multifamily Dive that stress runs through exhausted interest reserves. He said owners who refinanced in the past three years funded those reserves expecting rates to fall and the market to strengthen, and many have spent the money instead. "I think we are starting to see more distress in the industry," Fishman said, adding that debt funds that gave borrowers another year of runway are nearing the end of it.

GAIA extended its Williamsburg loan a second time in September, and with Raymond James it pushed the 55 Hope maturity to August 2027, according to this publication's reporting.