Finance  ·  Industry

$523B in Multifamily Loans Mature in Five Years; Five Cities At Risk: Report

Government-sponsored entities Fannie Mae and Freddie Mac have originated more than half of all outstanding multifamily loans


Fannie Mae (FNMA) and Freddie Mac (FMCC) have originated more than half of the $1.1 trillion in outstanding multifamily loans set to mature within the next decade, and a stunning $300 billion in agency debt comes due in the next five years alone, according to a new report from Yardi Matrix.  

Moreover, the largest number of properties secured by those same loans are within five metropolitan areas: Atlanta, Dallas, Denver, Houston and Chicago. All told, there are currently 58,333 multifamily properties nationally carrying an outstanding balance of $1.1 trillion.  

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“The gateway cities have the largest demand,” said Doug Ressler, manager of business intelligence for Yardi Matrix. “The developers are looking at it longer term — three to five to 10 years — and they’re asking, ‘Do I have the ability with a long runway to garner revenues with increasing expenses? Do I have the demand that I can bring people into my apartments to be able to get that revenue I need over the long term?’  

“Larger cities have more propensity for density,” he added. 

Due to changing work habits, easy money and a shrinking supply of single-family housing, demand for the asset class has surged over the last half decade, and lenders have eagerly financed a wave of borrowing. But now higher interest rates, flattening rents and lower values are testing the health of many of those loans. 

No type of lender has more multifamily loans than government-sponsored entities (GSE) Fannie Mae and Freddie Mac. GSEs currently have 30,505 outstanding loans carrying a total of $641.8 billion, roughly 56 percent of the entire loan total. 

“It’s a little higher than it has been in the past, but joint ventures are willing to work with them because the banks don’t want this stuff back,” said Ressler. “One of the things you have to look at is what the terms and conditions are with the loan: Can I extend-and-pretend with Fannie and Freddie as easily as I can with others?”  

Commercial banks carry roughly 9,400 loans, an outstanding loan amount of $187 billion (16.4 percent), while debt funds carry 2,550 loans with a value of $69 billion (6.2 percent) and life companies carry 2,700 loans with a value of $67 billion (5.9 percent). 

Commercial mortgage-backed securities hold a relatively modest place in the multifamily loan space: only 1,099 CMBS loans outstanding hold an amount of $25.7 billion (2.2 percent). 

Lenders originated 40 percent of outstanding multifamily in the low interest rate era of 2021 ($194.7 billion) and early 2022 ($209.8 billion) — prior to the 500 basis point increase in rates engineered by Federal Reserve Chairman Jerome Powell between March 2022 and September 2023. 

“Origination volume dropped by 45 percent to $115.3 billion in 2023, as high rates and tepid rent growth stalled transactions and refinancings,” according to the report. “Many loans that were scheduled to mature in 2023 were extended by lenders, as loans were underwater due to greater debt service costs under the higher interest rate environment.”  

The timeline for the loan maturities is spread so that nearly three-fourths of them will mature between 2027 and 2029. Approximately $61.8 billion worth of multifamily loans are set to mature this year (5 percent of the outstanding total), with another $84.3 billion maturing in 2025 (13 percent of the outstanding total). The post-2029 loan landscape exceeds $613 billion in maturities, reflective of the typical 10-year term given on most CRE loans. . 

Of the $1.1 trillion outstanding multifamily loans, 85 percent carry fixed rates, while 15 percent carry variable rates. 

“It’s better than an adjustable-rate mortgage, that’s for sure,” quipped Ressler. 

Over the next two years, as more than $111 billion in multifamily loans mature, several U.S. metro areas will take the brunt of facing the risk of those loans coming due in a higher interest rate environment. Between 2024 and 2025, roughly $12 billion in multifamily loans will mature within the Atlanta metropolitan area, $8 billion will mature in Dallas, $7 billion will mature in Denver, roughly $6 billion in Houston, and $5.5 billion in Chicago. Those five cities plus New York also face the highest amount of multifamily loans maturing between 2024 and 2027. 

The Yardi Matrix report emphasized that loan defaults are property specific, and market-level data remains an uncertain predictor of delinquency rates either now or in the future. Rather than maturity timetables, the real risk is a large amount of supply depressing rent growth just as the maturities take effect in some of these larger cities. 

“Most high-supply markets also have strong apartment demand,” according to the report. “However, large numbers of deliveries extend the time it takes to lease up new properties and increase concessions throughout the market, which has the potential to add stress to some properties.”  

There’s also the securitization element to the equation. 

A record $45 billion of collateralized loan obligations (CLO) were issued in 2021, of which $28 billion were backed by multifamily properties, according to data from Commercial Mortgage Alert. The Yardi Matrix Report cited from Morningstar DBRS showed the rate of CLO loans that are more than 30 days delinquent from 285 basis points to 6.2 percent by the end of 2023. 

But Ressler isn’t concerned by the slight uptick. 

“It’s an alternative that people are looking at right now and it’s really good from the standpoint that CLOs, C-PACE, they give you some alternative financing,” he said. “The CLO market is not a concern.”  

Brian Pascus can be reached at 




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