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- Nearly $10B In Debt Will Come Crashing Down On the Commercial Real Estate Sector Before the End of 2023
Nearly $10B In Debt Will Come Crashing Down On the Commercial Real Estate Sector Before the End of 2023
Wave of CMBS Loans Used To Purchase Multifamily Properties Approach Maturity Over the Next 90 Days
Michael Campbell
23 Jul
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Wave of CMBS Loans Used To Purchase Multifamily Properties Approach Maturity Over the Next 90 Days
All eyes have been fixated on the battered commercial office sector; however, billions in multi-family real estate are prime to unwind as early as October.
Remote work has shattered the once strong commercial office sector to pieces. Some of the most highly sought out urban core markets have been on a downward spiral; with vacancy rates as high as 30% in locales such as Los Angeles, Washington D.C. and San Francisco. Hybrid work schedules have become the norm and large companies all across the country have slashed their office square footage in an effort to cut costs.
But while non-residential investors attempt to resurrect the commercial office sector through complex rezoning and conversion efforts, multifamily real estate operators are preparing for their own Day of Judgement.
More than $8B in CMBS (Commercial Mortgage Backed Securities) tied to multifamily properties will become due for repayment from October to November. Being that the real estate debt sector is a multi-trillion dollar industry, a few billion dollars worth of loans wouldn’t traditionally hit headlines. But the fact that apartment building valuations have yet to stabilize and interest rates remain at a 10-year high, the holders of these notes have found themselves backed into a corner with no way to sell or refi.
Quick Takeaways 🔍
The Commercial Office Sector Isn’t the Only Piece of the Real Estate Market That’s Found Itself In Hot Water
Nearly $10B in CMBS (Commercial Mortgage Backed Securities) Tied To Multifamily Apartment Buildings Will Become Due By the End of The Year
With Values Down and Interest Rates Up, There’s No Smooth Exit Opportunities For These Debt Holders
On Another Note 🎶
👺Foreclosures Are Back With Vengeance: With the eviction and foreclosure moratoriums behind us, mortgage companies are catching up with those that’ve been holding out. — Realtor
💳 HELOCS Have Become HELLA Popular Amongst Homeowners: Saavy homeowners are tapping into their equity using HELOCs (Home Equity Line of Credit) rather than ditching their existing mortgage for an 8% interest rate. — Bloomberg
🛑 300 Toronto Tenants Say They’ve Had Enough: Hundreds of tenants across two apartment buildings have commenced a rent strike and have stopped paying rent due to what they believe to be ‘unregulated rent increases’ from their landlords. — CTV News
☘️ Boston Hopes to Boost Office-to-Residential Conversions By Offering Huge Tax Breaks: Boston Mayor Michelle Wu has proposed property tax breaks of up to 75% over 29 years to incentivize downtown office conversions. — The Real Deal
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