Are multifamily owners gearing up for a wave of refinances? Or will they sell their properties in droves? Either could happen, as more than 55,000 U.S. apartment properties have loans that are set to expire by the end of 2028, according to the latest research from Yardi Matrix.
According to a new report from Yardi Matrix, 58,533 U.S. multifamily properties are financed with loans set to mature during the next five years.
How big of a financial impact could this have? Yardi Matrix says these loans represent $525 billion of the total $1.1 trillion of loans currently backed by apartments.
Atlanta, with $34.9 billion in loans set to mature by the end of 2028, has the largest volume of upcoming maturities. Next comes Dallas, with $26.6 billion of multifamily loans scheduled to mature by the end of 2028; Denver, with $22.9 billion; Houston, with $20.8 billion; New York, with $19.9 billion; and Chicago, with $18.8 billion.
Markets with the highest percentage of loans coming due through the end of 2029 are Atlanta, with 65.9%; Denver, with 56.9%; Nashville, 56.2%; Las Vegas, 55.9%; Houston, 53.6%; and Chicago, 53.2%.
More than half of the multifamily loans found in Yardi Matrix’s database—$641.8 billion, equal to 56.3%—were originated by Fannie Mae and Freddie Mac. Next in line, at $187.3 billion, or 16.4%, came from commercial banks, followed by the federal government/HUD ($115.7 billion, 10.1%), debt funds (69.9 billion, 6.2%), life companies ($67.6 billion, 5.9%), and CMBS ($25.2 billion, 2.2%).
These numbers aren’t completely surprising. As Yardi Matrix reports, multifamily originations peaked in 2021, when $194.7 billion of loans were originated, and in 2022, when lenders closed $209.8 billion of multifamily loans. Low interest rates and high demand for rental living spurred this surge of new multifamily loans.
The interest-rate environment is different today, though, which could make it difficult for multifamily property owners to refinance. Others might struggle to sell their properties without taking a loss, depending on how the U.S. economy performs during the next five years.
The wave of maturing loans might result in an increase in multifamily sales during the next five years.
Of the loans in Yardi Matrix’s database, $61.8 billion are set to mature in 2024, with another $84.3 billion in 2025, $89.3 billion in 2026, $77.9 billion in 2027, and $107.3 billion in 2028. By percentage, 5.4% of the loans will mature by the end of this year, 12.8% by the end of 2025, 27.5% by the end of 2027, and 46.1% by the end of 2029.
Contact us for personalized advice on refinancing or selling your multifamily property ahead of loan expiration.
Source: It’s coming: Loans on more than 58,000 multifamily properties set to mature in next five years
https://www.creconsult.net/market-trends/future-multifamily-properties-refinance-sell/
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