While much of the commercial real estate industry has been focusing on concerns surrounding maturing office building loans, multifamily debt has increasingly become a significant concern for lenders and borrowers as the 25-basis-point interest rate hike in July increased the federal funds target rate to 5.25 to 5.5 percent. Moreover, June economic projections had the median rate at 5.6 percent by the end of the year. In other words, the rate has yet to peak.
Under these circumstances, we wanted to see how the current lending landscape presents itself. Drawing on Yardi Matrix data, we looked at multifamily loans nationwide, zeroing in on those with maturity dates set between 2023 and 2025. We then narrowed the data to the top 30 metros by volume of loans with maturity set during this three-year interval.
Overall, as of late August 2023, the U.S. had nearly 83,200 active multifamily loans, which combined totaled almost $1.5 trillion. Of this total, 22.7 percent, or 18,910 loans, had a maturity date within the 2023-2025 interval; the value of the loans with maturity within this period was the equivalent of 23 percent of the entire national loan volume, or $343 billion.
The top 30 metros had 47,295 active loans as of August, which represents 56.9 percent of all loans. These active loans totaled $1 trillion, or 68.6 percent of the $1.5 trillion national volume at that time.
Digging deeper, 24.2 percent of these loans (11,442 loans) had a maturity date during the three-year interval, valued at $250.4 billion, which represents a substantial 73 percent of all national loans with maturity dates between 2023 and 2025. Moreover, of the total number of loans nationally, 16.7 percent had maturity dates set within the 2023-2025 interval in just the top 30 metros, accounting for 13.4 percent of the $1.5 trillion total.
By volume of loans, banks originated the most permanent loans (37,948 loans nationally), followed by CMBS loans (35,325 loans), while construction loans were third in line with 6,657 originations. By dollar value, CMBS loans held the largest share of the total loan volume nationally, at $687.1 billion, but permanent loans were not far behind with $602.2 billion. Construction loans amounted to just $148.7 billion, reflecting the strenuous times experienced within the construction industry.
The dynamic was identical when looking at the top 30 metros, just at a smaller scale. The highest number of loans were also permanent loans (20,589 loans totaling $412.1 billion), but CMBS loans were close behind (20,300 loans totaling $460.5 billion). Construction loans rose to 4,262 for a total of $106.7 billion.
The distribution of multifamily loans maturing between 2023 and 2025 consisted mostly of permanent loans (8,113 loans totaling $150.9 billion), followed by CBMS loans (7,999 loans at $130 billion) and construction loans (1,804 loans at $52.3 billion). Narrowing it down to the top 30 metros, permanent loans held the highest volume ($111.1 billion), outperforming CMBS loans ($92.9 billion) and construction loans ($39.8 billion), but by number of originations, these amounted to 4,725 loans, slightly below the 4,905 CMBS loans and ahead of the 1,234 construction loans.
There were 2,201 bond loans as of August, valued at $52.7 billion nationally. Of these, 361 were set for maturity in the 2023-2025 period, amounting to $5.6 billion. Drilling down to the top 30 metros, these had 1,465 active bridge loans valued at $42.4 billion, 196 of which will mature during the interval, repaying nearly $3.6 billion.
Bridge loans were few: 207 valued at $3.2 billion, 202 of which had a maturity date within the three-year period, amounting to $3.15 billion. Finally, there were 714 lines of credit nationally as of August 2023, for a total of $620 million; 373 of these have a maturity date within the studied period ($100 million). In the top 30 metros, there were 475 active lines of credit valued at $503 million, 238 of which ($51 million) will mature within the three-year interval.
Things are even more interesting when examining these top 30 metros by loan type with maturity scheduled during the interval: Of the 114 bridge loans active across the top 30 metros, 112 will reach maturity. The dollar amount to be repaid is $2.33 billion out of a total of $2.36 billion. The focal points of interest—maturing CMBS, permanent and construction loans—sat in the 20 to 30 percent band: 24.2 percent of all active CMBS loans (4,905 loans) will reach maturity during this period, repaying 20.2 percent of the associated debt, or $92.93 billion. Furthermore, 22.9 percent of the permanent loans are expected to be repaid during this time, 4,725 loans, representing 27 percent of the total associated debt ($111.1 billion). Nearly one-third of the construction loans (29 percent, or 1,234 loans) will reach maturity during these years and will repay a considerable 37.3 percent of the associated debt ($39.8 billion).
Looking at multifamily loan volume by asset type—Renter-by-Necessity vs. Lifestyle—we noticed elevated demand for value-add plays. The number of loans for RBN assets was more than double the Lifestyle volume. Specifically, nationally there were 58,543 loans for RBN properties and 24,473 loans for Lifestyle projects. Yet the overall values were close, reflecting a high disparity in per-unit prices across property segments: $716.7 billion in loans serving RBN properties and $774.6 billion originated for Lifestyle assets.
Moreover, 26.5 percent of the loans issued for Lifestyle properties nationally (6,496 loans valued at $198.7 billion) are set to mature from 2023 to 2025, constituting 25.6 percent of the total Lifestyle loan volume. Meanwhile, 21.1 percent of all loans issued for RBN assets across the U.S. (12,376 loans) had maturity set for the three-year interval, valued at $143.5 billion, the equivalent of 20 percent of the total RBN loan volume.
In the top 30 metros studied, there was greater interest in upscale properties, as loans issued for Lifestyle properties accounted for 64.5 percent of the entire national Lifestyle loan quantum. Nearly 19 percent of these, or a number of 4,604 loans, are set to mature during the period, accounting for a dollar-volume of $155.3 billion. Loans issued for working-class assets in the top 30 metros accounted for 53.6 percent, or 31,396 loans, of the entire RBN loan volume. Of these, 6,806 loans (21.7 percent of issued loans) are set to mature between 2023 and 2025, or $94.3 billion (20.5 percent of dollar-volume).
On a metro level, Atlanta topped the chart by volume of multifamily loans maturing between 2023 and 2025. All four major Texas metros made it into the ranking, with Dallas, Houston and Austin in the top 10—Dallas and Houston ranking second and third, Austin seventh and San Antonio 22nd. Three of the major Florida metros scored high enough to make it onto the list, but none were in the top 10—Miami and Orlando ranked 11th and 12th, with Jacksonville in the 25th position. The presence of gateway markets was spotty across the list: Chicago occupied the sixth rank, followed by New York (9), Los Angeles (10), Miami (11), San Francisco (13) and Boston (30). The top six metros had double-digit loan volume maturing between 2023 and 2025, for a total of $107.8 billion.
Atlanta had 3,716 active loans as of August, totaling $78 billion. A substantial 34.3 percent of these loans (1,274) had a maturity date between 2023 and 2025; their total value of $28.9 billion represented 37 percent of overall volume. Permanent loans constituted the biggest share of loans set to mature in the analyzed period ($14.6 billion), followed by CMBS loans ($7.5 billion) and construction loans ($6 billion). Bridge and bond loans amounted to nearly $600 million combined. By asset class, Atlanta’s loan distribution during the three-year interval was $8.12 billion for RBN properties and $20.7 billion for Lifestyle assets.
Texas metro Dallas was not too far behind, with $23.6 billion in loans maturing through 2025. The figure equates to 28.8 percent of the $85.1 billion total loan volume, the highest in the country. Here, too, permanent loans account for the largest part of the volume ($10.8 billion), followed by CMBS ($9.3 billion) and construction loans ($3 billion). Bridge and bond loans amounted to $370 million. Loan distribution by asset class was heavily tilted toward Lifestyle properties ($15.6 billion), while loans issued for RBN properties amounted to $8 billion.
Houston rounded out the top three, with $16.3 billion in loans maturing during the three-year interval ending in 2025. The volume of CMBS loans was nearly equal to the one pertaining to permanent loans, slightly above $7.1 billion. Construction loans amounted to $1.5 billion, and bridge and bond loans totaled $440 million. Loans issued for working-class assets and maturing during the interval totaled $6.4 billion and for upscale properties totaled $9.9 billion.
In Denver, $15.3 billion in multifamily loans are set to mature between 2023 and 2025. Here, too, the spread between CMBS and permanent loans is narrow ($5.1 billion and $5.7 billion, respectively). Surprisingly, though, the volume of construction loans is a substantial $4.4 billion, the second highest in the country, behind only Atlanta. More than two-thirds of the total volume of loans maturing during the interval, or $10.3 billion, were originated for Lifestyle properties and $4.9 billion for RBN assets.
Washington, D.C., ranked fifth with $12.3 billion in multifamily loans set to mature during the period. CBMS loans comprised the largest portion of this volume ($6.9 billion), followed by permanent loans ($4.3 billion), construction loans ($840 million) and bond loans ($280 million); no bridge loans are set to mature during this interval. Here, too, the share of loans slated to mature between 2023 and 2025 was higher for Lifestyle properties ($6.7 billion), while RBN accounted for $5.5 billion.
Some interesting facts about the remaining metros: In Los Angeles, the share of loans maturing during the interval was higher in the RBN segment ($5 billion) than that originated for upscale assets ($4.1 billion). Similar cases were registered in San Francisco—$4.8 billion for RBN and $3 billion for Lifestyle—Philadelphia (Lifestyle $2.8 billion, RBN $1.8 billion), Columbus (RBN $2.5 billion, Lifestyle $1.8 billion), Baltimore (RBN $2.1 billion, Lifestyle $1.3 billion) and San Jose (RBN $1.7 billion and Lifestyle $1.4 billion).
