Cain International scored a whopping $2 billion in construction financing for One Beverly Hills, the 17.5-acre luxury development complex in Beverly Hills, Calif. The financial package included a $500 million senior loan from JPMorgan Chase (JPM).

The project includes a luxury Aman hotel, a 10-acre “garden oasis,” two residential towers (which promise to be the tallest in Beverly Hills) and lord only knows what else.

We needed that.

It’s not like there haven’t been other impressive loans of late. Like, say, RXR seizing $118 million from Starwood to refinance its office property, The Hall, in Downtown Brooklyn and its mixed-use project One Clinton Hill in New Rochelle. Or Dwight Mortgage scoring nine figures ($108.2 million, specifically) for its luxury building The Shoreline in Gravesend Bay, Brooklyn. Or T2 Hospitality recapitalizing two Marriotts in Silicon Valley with $102.9 million in bridge financing from Peachtree Group.

But getting up into 10 figures? Well, we haven’t felt that good in a while.

Frank ‘Cush’ discussion

We didn’t notice when we first watched “Jerry Maguire” back in 1996 (maybe because we weren’t in the commercial real estate biz back then) but Cruise’s golden boy client was named Frank “Cush” Cushman.

Unless Wikipedia and IMDB are lying to us, yes, like Cushman & Wakefield (CWK)!

Cush was the semi-treacherous quarterback who was the No. 1 overall draft pick in … well, whenever “Jerry Maguire” took place. (Ably played with grinning phoniness by Jerry O’Connell. Honestly, we liked him better when he was Vern in “Stand By Me.”)

Cushman (the firm, not the character) was on our minds last week in any event after Commercial Observer sat down with its (relatively) new CEO Michelle MacKay to discuss how the real estate Goliath is dealing with an extremely vexing market.

The bad news: C&W (like almost every real estate firm) saw declines last year: 6 percent in revenue, 10 percent in service-line fees, a 12 percent slip in its leasing and valuations business, and a 41 percent drop in revenue from its capital markets business. (There were other things, too, like losing Brookfield Property’s business and some high-profile departures.)

But it’s not like MacKay has been twiddling her thumbs. She first moved to refinance $1.4 billion in debt that the company has due in 2024. And the fourth quarter of last year saw C&W outhustle its peers in one asset class that nobody has earned their bragging rights: office leasing.

“We’ve got some of the best people in the business,” MacKay told CO. “Our competitors think about brokers in terms of transactions, but we’re advisers to clients in how they think about and use space.” 

And during its fourth quarter earnings call they could claim $101.2 million in cash flow.

Persistence pays. Or, to quote a sign in a “Jerry Maguire” locker room: “Success consists of simply getting up one more time than you fall.”

‘If this is empty — this doesn’t matter.’

No, Dicky Fox (Tom Cruise’s menschy agent mentor) was not talking about office space in the former part of the statement — he was gesturing toward his left breast. (The latter thing was the head.)

But “empty” should worry us all regarding office space.

In Downtown Manhattan the office vacancy rate is still above 20 percent, and nearly every brokerage expects it to stay that way. However, that comes with caveats.

“The numbers don’t really tell the whole story,” Newmark (NMRK)’s Andrew Peretz told CO. “In reality, phones are ringing, there are tours, there are inquiries, paper is being traded. Better-quality assets are seeing activity.”

And Peretz for one figures that the answer is likely in conversions.

Indeed, Vanbarton Group has already embarked on a massive conversion at 160 Water Street — what the developer is calling Pearl House — of which CO was given a sneak peek recently.

Conversion is one of those easy solutions that is actually far more difficult to execute the closer you look. But they’re possible in the right hands.

“Through strategic architectural interventions — including altering building cores, retrofitting operable windows, and adding new floors with an overbuild atop the original structure — the team has catalyzed a metamorphosis at 160 Water Street,” architect Robert Fuller told CO.

Indeed, at 219-235 East 42nd Street we learned from The Real Deal that Nathan Berman (one of the great gurus of conversion) and David Werner are planning a 1,500-unit mega-rental.

But whether it’s by conversion or new development, more housing is essential. And New York City has gotten on board with the Department of Buildings unveiling the draft of a rezoning plan for a 42-block stretch of Midtown South that would open it up to 4,000 new units.

Did you know that the human head weighs 8 pounds?

There’s a lot to think about right now in American real estate. But real estate is an important topic everywhere.

Last week CO was on the ground at MIPIM in Cannes, France, to get a more global perspective on commercial real estate.

Of course, that meant in some cases sitting down with figures we see in New York (yes, we’re talking about you, Dean Shapiro) as well as figures we see less frequently like Marino Giannopoulos, the CEO of Enterprise Greece, that nation’s trade agency.

There was some optimism, some political nervousness, and some mixed thoughts on the future.

Which was sort of the case in South Florida, where CO hosted its South Florida Multifamily & Mixed-Use Forum.

“COVID has supercharged our growth,” Allen Morris Company’s Daniel Schwimmer told his panel.

But this could have been easily rebutted with an observation from Terranova’s Stephen Buttel: “The banks here are out of business.”

Guess it’s the same story everywhere.

But, if you want a largely happy story, you should look to industrial and logistics. Whether the future is as bright as the recent past, that’s an asset class that has been on an upward trajectory for years.

So, before you go too far in celebrating St. Patrick’s Day, you should cozy up with a nice pint of Guinness and read our interview with Prologis (PLD)’s Megan Creecy-Herman.

Erin go bragh!

Ladder Capital led the financing that originated in 2017, records show. The lender did not return a request for comment. 

The hotel at 5855 West Century Boulevard was built in 1972 just outside of the property of the Los Angeles International Airport. XLD Group, a U.S. subsidiary of China-based Sichuan Xinglida Group Enterprises, acquired the asset in December 2014 for $135.4 million during a time when Chinese investment was flowing into the L.A. real estate market. According to reporting at the time, it was the biggest hotel sale of the year in L.A. County.

Trepp’s report added that the property’s appraised value fell to $182 million in April 2021, a nearly 40 percent drop from the $300.8 million valuation made at securitization.

The hotel’s occupancy was 85.9 percent in 2023, a slight increase from 83.8 percent in 2022, per Trepp

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.

“Mike Hutchins is a proven leader who brings a deep understanding of every aspect of Freddie Mac to the role of Interim CEO,” said Lance Drummond, non-executive chair of Freddie Mac’s board of directors, in a statement. 

Hutchins has more than three decades of experience in the financial services industry, with previous senior positions at UBS and Salomon Brothers and as co-founder and CEO of Princeridge. His career at Freddie Mac began in 2013 as senior vice president, followed by executive vice president of investments and capital markets. Hutchins could not immediately be reached for comment. 

Hutchins’s appointment comes ahead of a busy upcoming few years for Freddie Mac. Together with Fannie Mae, the two government-sponsored entities have originated more than half of the $1.1 trillion in outstanding multifamily debt maturing within the next ten years — $300 million of which comes due in the next five years, according to reporting this week by Commercial Observer. 

Nick Trombola can be reached at NTrombola@commercialobserver.com.

And, this weekend, women’s sports will reach another major milestone. The Kansas City Current will play the opening game of the NWSL season in the brand-new CPKC Stadium in downtown Kansas City, Mo., the very first stadium purpose-built for a professional women’s team. 

“There are now ownership groups in women’s sports that are taking the sports seriously, and they’re taking profit maximization seriously,” said Nola Agha, a University of San Francisco professor who specializes in sports economics and finance. “It means treating the women’s sport as if it’s the same as any other for-front business. And that’s a change in mindset.”

The KC Current was founded in 2020 by power couple Angie and Chris Long, along with Brittany Mahomes, wife of Kansas City Chiefs quarterback Patrick Mahomes, who joined the ownership group last year. The co-owners announced plans for the stadium back in 2021 and broke ground in 2022 on the $117 million arena, which is along the Berkley riverfront in an area undergoing substantial redevelopment. 

The arena is off to quite the start. The 11,500-seat arena is already sold out for every home game of the season, which marks a 46 percent increase above the average attendance for an NWSL game. And amid last year’s rush of WNBA media deals and record-breaking events, KC Current ownership closed on a 10-year naming rights deal for the stadium with Canadian railway giant CPKC in October, adding an additional revenue stream for the team. Earlier this week, the team announced it would host college’s Big 12 Conference soccer tournament in 2024 and 2025, another source of revenue. 

Which is, of course, what the stadium was made for. 

“It’s very symbolic, but it’s also very economical,” Victor Matheson, a professor of economics at College of the Holy Cross, said of the stadium. “If you’re a tenant in someone else’s stadium, that means lots of things are lost to you as revenue streams.”

Until now, all women’s professional teams in the U.S. have rented space where they could, including in arenas used primarily for men’s sports as well as in college or youth facilities, or they’ve shared space with other teams. As they are usually the secondary or even tertiary tenant, women’s teams lose out on revenue from concessions, jersey sales, suite rentals and sponsorships, which are controlled by the stadium owner or primary tenant.

“In the context of professional sports, you don’t necessarily have to own your own arenas, but you do have to have control of all your sources of revenue,” said Agha. “Owning the stadium is a great testament to the ownership group, but the most important part is the team now controls and owns all the revenue streams.”

In the case of the NWSL, some teams share a stadium with MLS teams in a dedicated soccer stadium. In fact, the two teams drawing the biggest crowds in 2023 — Angel City FC in Los Angeles and the Portland Thorns FC — follow this model, playing in BMO Stadium and Providence Park, respectively. Until this year, KC Current played in Children’s Mercy Park, a stadium built for Sporting KC, the city’s MLS team. 

The same goes for the WNBA, and other professional women’s leagues as well as across the pond, and all across Europe. Despite the prominence of European soccer clubs, women’s leagues that share the same names as England’s biggest clubs play in smaller facilities, in youth academies, or on college grounds, primarily because they don’t draw the same crowds as the men’s teams. 

That’s a byproduct of the longstanding underinvestment in women’s sports. 

“Historically, women’s sports have been an afterthought,” said Agha. “They’ve certainly been an afterthought in professional settings. The early owners did it out of sympathy.”

England offers a potent lesson in the consequences of sidelining women’s sports. The British banned women from playing in any Football Association stadium for over 50 years, after women’s soccer exploded in popularity during World War I while the men were at war and the men’s game was suspended. 

The ban went into effect in 1920, just after a women’s league final drew a record crowd of 53,000 fans. Opponents of this phenomenon helped spread panic about the game’s effect on women — physically and morally — with the help of questionable medical professionals. The ban was not lifted until the 1970s, effectively smothering women’s soccer in England for decades. The game became more professional during the 1990s, when the current women’s league system was instituted. 

Now, the English women’s team outshines the men’s team on the international stage. “England, which takes pride in inventing the game —  their men’s team has sucked,” said Matheson. “They have a grand total of one title, when they played it at home in 1966.” 

But the English women’s team won the Euro Cup in 2022, reached the World Cup final in 2023, and sold out Wembley Stadium when they played against the U.S. last May. Similarly, the U.S. Women’s National Team has won four World Cups. The men — well, it’s a win if they qualify. 

As attitudes change toward women’s sports, the virtuous cycle of investment and attention continues to escalate, with bigger crowds, more lucrative media deals, and higher valuations. More importantly from an investment perspective, the benefit in women’s sports is that it still has plenty of room to grow. 

“What we’re seeing now is a market that’s not been tapped,” said Robyn Lubisco, an associate professor of sports management at Fairleigh Dickinson University. “Right now, NWSL is a good product and they make money.”

While the majority of sports investments areis tied to media deals, other revenue streams matter just as much. The KC Current stadium therefore makes a statement about the professionalization of the women’s game, and could also entice other teams to follow suit. 

“The hope is that once this stadium takes off and it does well it will translate to other sports,” said David Caputo, an analyst at Moody’s Analytics who authored a report on the growth of women’s sports facilities. “If it’s helping these teams become more successful, and they’ll get higher attendance at the games, it will spread out to other teams who will want to get in on the action.”

That’s already the case in Boston, where the owners of an upcoming NWSL franchise are planning a $30 million redevelopment of Boston’s existing White Stadium, part of a larger development plan with the city. The deal is backed by Boston Unity Soccer Partners, the group that owns the as-yet-unnamed expansion team, which will begin to play in 2026 alongside new NWSL teams in San Francisco and Salt Lake City. 

“With respect to the Boston issue, I would say that the success of the new expansion teams in L.A., San Diego, as well as the stadium being built in Kansas City, is exactly the sort of thing that spurred a new Boston ownership group to come back into this market,” said Matheson. 

Not only that, but it would have led to their decision to invest in a stadium of their own to control their own revenues. “They had been playing at Harvard Stadium, but that makes money for Harvard, not for the team,” Matheson added. 

That said, it’s unlikely that it will spark a huge wave of stadium construction, because many NWSL teams are already settled in contracts to share MLS stadiums, while other sports arenas are harder to build. 

Plus, it remains to be seen how soon KC Current revenue will offset the cost of building the CPKC Stadium. “There’s no doubt this will have a positive effect on revenues. Whether it’s positive enough to pay for the outlays that the owners have put out on this, that’s a whole other question,” said Matheson. 

That said, this could just be the start. KC Current intends to follow a similar playbook to other sports teams that rely on mixed-use development around the stadium for further sources of revenue. 

“The way stadiums are getting built now, it’s with the intention of having the game experience last longer than the game itself,” said Caputo. “That’s why it’s switching now to being more urban, to having tons of other options.”

Last July, the team secured an additional 11 acres of publicly owned land along the waterfront near the stadium, as well as the rights to develop an $800 million mixed-use neighborhood, with more than 1,000 apartments in several towers, as well as office and retail space, to be completed over the next 10 years. The deal has the backing of Port KC, the governmental development authority which controls the site, and includes a 15-year property tax abatement as well as other incentives. 

So not only will other teams be watching closely to see how the arena impacts the finances, but local governments and developers may also be looking at the impact of the stadium on the surrounding area. “This is a test case,” said Caputo. “If this is a real success, other governments might see how this is working and they’ll want to finance stadiums in the future, like they do for men’s teams.” 

For now, the important thing is winning. As the NWSL season kicks off Saturday, many players will be fresh off the U.S. Women’s National Team victory in the first-ever CONCACAF Women’s Gold Cup, where the team took home gold after a 1-0 win against Brazil last week. 

And they’re just getting started.

But it’s the strategic investment that makes it possible. 

“It took a group of owners to take the sport seriously, and not treat it as a subcategory, in order for this moment to occur,” said Agha. “It’s the full compilation of taking it seriously, staffing it properly and running it as a professional business.”

Chava Gourarie can be reached at cgourarie@commercialobserver.com.

The project is estimated to cost $8.8 billion throughout its 13-year development cycle. The redevelopment aims to add an entirely new rail terminal with four new concourses, plus a new bus facility, pedestrian throughway and new retail spaces. The FRA’s approval means that the nonprofit Union Station Redevelopment Corporation (USRC), which helms the project in coordination with Amtrak, can begin securing funding for the more detailed design and planning phases. 

“This is an important milestone for the future transformation of Union Station. As sponsor of this once-in-a-lifetime project, we realize this is just the first of several significant steps ahead of us,” USRC CEO and President Doug Carr told Commercial Observer. “It’s important to understand that the project is at the preliminary design phase. It now must be translated into reality, and so the next phase of hard work, bolstered by outside support, begins.”

Before taking the head role at USRC, Carr oversaw New York City’s Moynihan Train Hall redevelopment between 2018 through 2022. That project, which overhauled the city’s James A. Farley Post Office building, began in 2010 and was fully opened in early January 2021. 

With Union Station’s hoped-for completion date of 2040, construction would need to begin by 2027 at the latest. Yet the project is already behind schedule and the all-important matter of funding is still up in the air, especially as the District, and the regional transportation authority (Metro) in particular, faces severe budget shortfalls. The project could potentially take advantage of money earmarked for Amtrak expansion via the $1.2 trillion infrastructure bill signed by President Biden in 2021, though USCR can’t apply for those funds until the pre-construction phase is complete. 

The station’s facelift isn’t the only project at stake. If and when construction commences, it would by proxy allow an adjacent 3.7 million-square-foot mixed-use development, dubbed Burnham Place, to also proceed. That project, in the oven for more than two decades, would add up to a dozen buildings along 15 acres of airspace that developer Akridge owns above the station’s train tracks. 

Union Station opened in 1907 and is owned by the federal government, but overseen by and leased to other organizations and institutions. Amtrak owns the station’s tracks and platforms, while the government picked USRC to manage the historic station back in 1985. The redevelopment project would preserve the station’s main hall and rotunda, which was added to the National Register of Historic Places in 1973. The station is the 10th-busiest railroad hub in North America, with about 40 million annual visitors. 

The FRA’s assessment also notes a number of challenges inevitably caused by the redevelopment effort. Nearly 3 acres of Akridge’s air rights would need to be acquired for the new station, the report says, along with temporary road closures, years-long construction traffic and a severe reduction of parking revenue once the station’s existing parking garage is demolished to make way for a much smaller underground complex. 

Yet the benefits of the project far surpass the downsides, the report said, including enhancing ridership capacity, renovating ADA-compliant train platforms and beefing up security. Union Station’s redevelopment is a major component of regional economies for Maryland and Virginia, as well as D.C., and supports the broader national goal of creating a “world-class” national passenger rail system in the nation’s capital, according to USRC.

“The project is needed to improve rail capacity, reliability, safety, efficiency, accessibility and security for both current and future long-term railroad operations,” the FRA report said.

Nick Trombola can be reached at NTrombola@commercialobserver.com.

The proposed tower would feature 280 hotel rooms and 351 multifamily units as well as a 5,214-square-foot rooftop restaurant and pool deck and 9,723 square feet of ground-floor retail space. The 0.6-acre site, which is now vacant, would also be home to a 14,000-square-foot plaza.

Art Falcone, who founded and leads Boca Raton-based Falcone Group, is also a master developer of Miami Worldcenter, the 27-acre mega-development that’s attracted a slew of high-profile developers, such as Naftali Group, Related Group, and Witkoff Group, among others. 

Just last week, an entity tied to WeWork’s ex-CEO Adam Neumman proposed a mixed-use development in the southern part of Miami Worldcenter with about 40,000 square feet of offices and 19,000 square feet of retail space, alongside the Miami Worldcenter developers. 

Miami Worldcenter Holdings, led by Nitin Motwani and Falcone, are looking to raise $240 million through a municipal bond sale for the project, an offering document shows.

A representative for Falcone Group could not be reached for comment.

Julia Echikson can be reached at jechikson@commercialobserver.com.

Aztec Group negotiated the debt. 

The property is part of a larger 64-acre mega-development already underway called Lotis Wellington. Some of the ground-floor development was facilitated by a $90 million round of financing for land acquisition, entitlements and pre-construction. Once completed, the project will bring 61,375 square feet of commercial space and a 60,000-square-foot medical office building to a  site on State Road 7 north of Wellington Regional Medical Center.

Aztec Group’s Sean Harrington represented Lotis in the transaction. Douglas Papy  represented BlueFin in the deal, and is also the firm’s CIO. 

Lotis and Harrington did not respond to a request for comment, while BlueFin Financial could not be reached for comment. 

Lotis has run the gantlet in terms of getting the project — which includes a mix of townhomes, multifamily office, retail, and an independent living facility — approved by local officials. It was eventually approved by the Wellington Village Council after they shot down a first draft of the plan which council members viewed as exposing the community to too many one-bedroom apartments rather than housing for families. 

The developers also wanted to exclude senior housing in the plan to attract more support from the local government, which gave the proposal a nod in January.

Included in the project plan is space for PopStroke Entertainment Experience, a venture backed by Tiger Woods and TaylorMade, as well as a Kids R Kids Daycare, according to Aztec Group.’

Mark Hallum can be reached at mhallum@commercialobserver.com.

The all-cash deal remained in contract for about a year, and the sellers originally asked $4.9 million, said Current Real Estate Advisors’ Alejandro Snyder, who represented the buyers. 

“There’s obviously a gap in the market between sellers’ expectations and where buyers are able to make these development deals pencil,” the broker said.

Onyx Housing Group, led by Shadi Shomar and Gonzalo De Ramon, plans to develop a 159-unit multifamily development, called Regatta Point, which will feature two four-story buildings and a surface parking lot. The site is roughly 33 miles southwest of Downtown Miami.

The sellers, Jeffrey Jay and Ana Maria Butthad, had purchased the property for $500,000 in 2001, according to property records. Lisa Gonzalez of KW Commercial, who represented the sellers, confirmed the sale.

Construction on Regatta Point is expected to start mid-2025 with completion slated for the third quarter of 2026.

“There’s a lot of noise around land development more towards the urban core, but a lot of those deals aren’t necessarily making sense today because of rising construction costs and the cost of structured parking,” said Current’s Michael Williams, who also represented the buyer. “A deal such as this, where you’re planning [a] surface parking lot, works a lot better.”

Onyx Housing Group, which is based in Fontainebleau, is under contract to buy another development site nearby. Onyx’s pipeline includes several projects in Florida, such as  Naranja Grove, a 337-unit apartment complex at 24000 Southwest 127th Avenue in Princeton, Fla., and an 846-unit development on 47 acres in Fort Pierce. 

Julia Echikson can be reached at jechikson@commercialobserver.com. 

Asking rent ranged from $50 to $60 per square foot, according to KSR.

The gym will occupy the lower level and second floor of the building, which is also known as Eleven Hancock, as well as 500 square feet on the ground floor. It will offer personal training as well as a range of group classes, including yoga, cardio kickboxing, fitness boot camp, Zumba and pilates. Plus, there will be a juice bar on site.

Longtime friends Dennis Cieri and Richard Scarpati founded Fitness Factory in 1997, according to the company’s website. The gym has grown to 15 locations in New Jersey and Yonkers, N.Y., and serves more than 100,000 members. 

“We are excited to be part of the Harlem renaissance, where we will serve this dynamic community with our first-class offering and services,” a spokesperson for Fitness Factory said in an email.

KSR’s Eli Yadid and Ori Melloul arranged the deal for Fitness Factory and Nortco.

Yadid said New Yorkers should expect to see more Fitness Factory locations opening on this side of the Hudson River soon.

Abigail Nehring can be reached at anehring@commercialobserver.com.

“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 bpascus@commercialobserver.com